State Income Tax

AAA

DEFINITION of 'State Income Tax'

Tax levied on income at the state level. State income taxes have their own set of deductions and credits that may be awarded for certain activities, such as contributing to a state-sponsored 529 plan. Taxpayers who itemized deductions on their federal returns may deduct state taxes paid on Schedule A.

INVESTOPEDIA EXPLAINS 'State Income Tax'

Not all states assess income tax. Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming have no state tax of any kind. New Hampshire and Tennessee levy tax on dividend and interest income only. Of course, the overall level of taxation varies from one state to another.

RELATED TERMS
  1. Non-Resident Entertainers' Tax

    A state tax levied against performers whose legal residence is ...
  2. Sixteenth Amendment

    The amendment within the Constitution that gives Congress the ...
  3. Income Tax

    A tax that governments impose on financial income generated by ...
  4. Local Tax

    A tax assessed and levied by a local authority such as a county ...
  5. Taxes

    An involuntary fee levied on corporations or individuals that ...
  6. Capital Expenditure (CAPEX)

    Funds used by a company to acquire or upgrade physical assets ...
RELATED FAQS
  1. What are the best and worst states to pay taxes in?

    Most people can probably guess the two worst states for taxation in the U.S. – New York and California. The two best, Wyoming ... Read Full Answer >>
  2. Why does the IRS withhold income taxes from employee paychecks?

    In the midst of WWII, the U.S. government ran into trouble funding the war effort. The problem did not originate from citizens ... Read Full Answer >>
Related Articles
  1. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience – and all the tax benefits you're due.
  2. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  3. Retirement

    Finding A Retirement-Friendly State

    Which states are tax-effective retirement locales? It depends on the source of your retirement income.
  4. Taxes

    Top 9 Solutions To An Unexpected Tax Bill

    Finding out you owe when you expected a refund is a nasty shock. Find out how to cope.
  5. Savings

    How Microeconomics Affects Everyday Life

    Microeconomics is the study of how individuals and businesses make decisions to maximize satisfaction. Microeconomic principles can describe many everyday experiences. We use renting a New York ...
  6. Credit & Loans

    6 Ways To Build Credit Without A Credit Card

    It's definitely possible – if a bit more complicated – to build a credit history without traditional credit cards. Just follow these steps.
  7. Taxes

    The First Thing You Should Do With Your Tax Refund

    Nobody likes to pay taxes, but everyone loves to get a tax refund. When the check arrives in the mail, it's hard to resist spending it on some indulgence.
  8. Taxes

    How Does An IRS Audit Work?

    It doesn't automatically mean an IRS agent will be ringing your doorbell. Here are the different types of IRS audits and how to handle them.
  9. Taxes

    What is the Effective Tax Rate?

    The effective tax rate is the average rate at which an individual or corporation is taxed per year.
  10. Taxes

    Switzerland's Declining Tax Haven Appeal

    Switzerland's tax haven allure is being threatened by efforts by the US and other governments to make Swiss banks give up their much-vaunted secrecy.

You May Also Like

Hot Definitions
  1. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  2. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  3. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  4. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  5. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
  6. Currency Carry Trade

    A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase ...
Trading Center