Your feedback ensures we stay focused on the facts that matter to you most—take our survey.
Personal income tax
This article does not receive scheduled updates. If you would like to help our coverage grow, consider donating to Ballotpedia. Contact our team to suggest an update.
 |
|
Personal income tax is the tax levied by a state (or other government entity) on an individual's income. Of the 50 states and Washington, D.C., only seven do not levy a personal income tax. Tax rates vary significantly from state to state. Some use a flat rate to calculate the tax, but most often states use bracket systems that vary the rate according to the individual's income.[1]
Personal income taxes comprise roughly one-third of all tax revenue collected by states. Personal income tax revenue has become increasingly important to state revenues. In 1950, personal income tax comprised approximately 9.3 percent of all state tax revenue. By 1970, that share had increased to 19 percent. As of 2010, the share had expanded further still to 33.5 percent.[2]
How personal income tax is calculated
The United States utilizes a marginal tax rate system, under which different tax rates apply to different income brackets. Some mistakenly believe that a given tax rate applies to the entirety of an individual's income. This is not the case, however. Instead, rates apply to portions of taxable income. Investopedia explains the concept in the following example, which assumes taxable income of $32,050:[3][4]
| “ | [T]he way the marginal tax system works, you pay different tax rates on different portions of your income. The first dollars you earn are taxed at the lowest rate, and the last dollars you earn are taxed at the highest rate. In this case, you paid a 10% tax on the first $9,075 you earned ($907.50). On the remaining $22,975 of income ($32,050 – $9,075), you were paying a 15% tax ($3.446.25). Your total tax was $4,353.75, not $5,400. While your marginal tax rate was 15%, your effective tax rate was lower, at 12% ($4,353.75/$36,000).[5] | ” |
| —Investopedia | ||
Personal income tax rates
2017
Federal rates
The table below summarizes federal personal income tax rates for 2017.[6]
| Federal personal income tax rates, 2017 (single filing status) | ||
|---|---|---|
| Taxable income | Tax rate | |
| Low | High | |
| $0 | $9,325 | 10% |
| $9,325 | $37,950 | 15% |
| $37,950 | $91,900 | 25% |
| $91,900 | $191,650 | 28% |
| $191,650 | $416,700 | 33% |
| $416,700 | $418,400 | 35% |
| $418,400 and up | 39.60% | |
| Note: For complete notes and annotations, please see the source below. Source: Tax Foundation, "2017 Tax Brackets," November 10, 2016 | ||
| Federal personal income tax rates, 2017 (married filing jointly) | ||
|---|---|---|
| Taxable income | Tax rate | |
| Low | High | |
| $0 | $18,650 | 10% |
| $18,650 | $75,900 | 15% |
| $75,900 | $153,100 | 25% |
| $153,100 | $233,350 | 28% |
| $233,350 | $416,700 | 33% |
| $416,700 | $470,700 | 35% |
| $470,700 and up | 39.60% | |
| Note: For complete notes and annotations, please see the source below. Source: Tax Foundation, "2017 Tax Brackets," November 10, 2016 | ||
| Federal personal income tax rates, 2017 (head of household) | ||
|---|---|---|
| Taxable income | Tax rate | |
| Low | High | |
| $0 | $13,150 | 10% |
| $13,150 | $50,800 | 15% |
| $50,800 | $131,200 | 25% |
| $131,200 | $212,500 | 28% |
| $212,500 | $416,700 | 33% |
| $416,700 | $444,500 | 35% |
| $444,500 and up | 39.60% | |
| Note: For complete notes and annotations, please see the source below. Source: Tax Foundation, "2017 Tax Brackets," November 10, 2016 | ||
State rates
The table below lists the personal income tax rates for all 50 states. Of the 50 states (and Washington, D.C.), only seven do not collect a personal income tax. For the remaining states that do collect the tax, rates range significantly, as do bracket structures.[7]
| Personal income tax rates, 2017 | ||||||
|---|---|---|---|---|---|---|
| State | Tax rates | Number of brackets | Brackets | |||
| Lowest | Highest | Lowest | Highest | |||
| Alabama | 2% | 5% | 3 | $500 | $3,001 | |
| Alaska | No state income tax | |||||
| Arizona | 2.59% | 4.54% | 5 | $10,179 | $152,668 | |
| Arkansas | 0.9% | 6.9% | 6 | $4,299 | $35,100 | |
| California | 1% | 12.3% | 9 | $8,015 | $537,498 | |
| Colorado | 4.63% | 1 | Flat rate | |||
| Connecticut | 3% | 6.99% | 7 | $10,000 | $500,000 | |
| Delaware | 0% | 6.6% | 7 | $2,000 | $60,001 | |
| Florida | No state income tax | |||||
| Georgia | 1% | 6% | 6 | $750 | $7,001 | |
| Hawaii | 1.4% | 8.25% | 9 | $2,400 | $48,000 | |
| Idaho | 1.6% | 7.4% | 7 | $1,454 | $10,905 | |
| Illinois | 3.75% | 1 | Flat rate | |||
| Indiana | 3.23% | 1 | Flat rate | |||
| Iowa | 0.36% | 8.98% | 9 | $1,573 | $70,785 | |
| Kansas | 2.7% | 4.6% | 2 | $15,000 | $15,000 | |
| Kentucky | 5% | 1 | Flat rate[8] | |||
| Louisiana | 2% | 6% | 3 | $12,500 | $50,001 | |
| Maine | 5.8% | 7.15% | 4 | $21,100 | $200,000 | |
| Maryland | 2% | 5.75% | 8 | $1,000 | $250,000 | |
| Massachusetts | 5.1% | 1 | Flat rate | |||
| Michigan | 4.25% | 1 | Flat rate | |||
| Minnesota | 5.35% | 9.85% | 4 | $25,390 | $156,911 | |
| Mississippi | 3% | 5% | 3 | $5,000 | $10,001 | |
| Missouri | 1.5% | 6% | 10 | $1,000 | $9,001 | |
| Montana | 1% | 6.9% | 7 | $2,900 | $17,600 | |
| Nebraska | 2.46% | 6.84% | 4 | $3,090 | $29,830 | |
| Nevada | No state income tax | |||||
| New Hampshire | State Income Tax of 5% on Dividends and Interest Income Only | |||||
| New Jersey | 1.4% | 8.97% | 6 | $20,000 | $500,000 | |
| New Mexico | 1.7% | 4.9% | 4 | $5,500 | $16,001 | |
| New York | 4% | 8.82% | 8 | $8,500 | $1,077,550 | |
| North Carolina | 5.499% | 1 | Flat rate | |||
| North Dakota | 1.1% | 2.9% | 5 | $37,950 | $413,350 | |
| Ohio | 0.495% | 4.997% | 9 | $5,250 | $208,500 | |
| Oklahoma | 0.5% | 5% | 6 | $1,000 | $7,200 | |
| Oregon | 5% | 9.9% | 4 | $3,400 | $125,000 | |
| Pennsylvania | 3.07% | 1 | Flat rate | |||
| Rhode Island | 3.75% | 5.99% | 3 | $61,300 | $139,400 | |
| South Carolina | 0% | 7% | 6 | $2,930 | $14,600 | |
| South Dakota | No state income tax | |||||
| Tennessee | State Income Tax of 6% on Dividends and Interest Income Only | |||||
| Texas | No state income tax | |||||
| Utah | 5% | 1 | Flat rate | |||
| Vermont | 3.55% | 8.95% | 5 | $37,950 | $416,700 | |
| Virginia | 2% | 5.75% | 4 | $3,000 | $17,001 | |
| Washington | No state income tax | |||||
| West Virginia | 3% | 6.5% | 5 | $10,000 | $60,000 | |
| Wisconsin | 4% | 7.65% | 4 | $11,230 | $247,350 | |
| Wyoming | No state income tax | |||||
| Note: For complete notes and annotations, please see the source below. Source: Tax Policy Center, "Individual State Income Tax Rates 2000-2017," accessed October 26, 2017 | ||||||
Personal exemptions
States that collect a personal income tax allow individuals to claim personal exemptions on income taxes each year. The personal exemption indicates that only a person's income above a certain level is subject to taxation. [9]
Exemptions work by reducing the amount of an individual's taxable income. Both state and federal taxes allow exemptions. The state exemptions as reported by the Tax Policy Center are reported in the chart below.[10]
| Personal exemptions, 2015 | |||
|---|---|---|---|
| State | Single | Married | Dependents |
| Alabama | $1,500 | $3,000 | $500 |
| Alaska | No state income tax | ||
| Arizona | $2,100 | $4,200 | $2,300 |
| Arkansas | $26 | $52 | $26 |
| California | $111 | $222 | $344 |
| Colorado | $4,050 | $8,100 | $4,050 |
| Connecticut | $14,500 | $24,000 | $00 |
| Delaware | $110 | $220 | $110 |
| Florida | No state income tax | ||
| Georgia | $2,700 | $5,400 | $3,000 |
| Hawaii | $1,144 | $2,288 | $1,144 |
| Idaho | $4,050 | $8,100 | $4,050 |
| Illinois | $2,000 | $4,000 | $2,000 |
| Indiana | $1,000 | $2,000 | $2,500 |
| Iowa | $40 | $80 | $40 |
| Kansas | $2,250 | $4,500 | $2,250 |
| Kentucky | $20 | $40 | $20 |
| Louisiana | $4,500 | $9,000 | $1,000 |
| Maine | $4,050 | $8,100 | $4,050 |
| Maryland | $3,200 | $6,400 | $3,200 |
| Massachusetts | $4,400 | $8,800 | $1,000 |
| Michigan | $4,000 | $8,000 | $4,000 |
| Minnesota | $4,050 | $8,100 | $4,050 |
| Mississippi | $6,000 | $12,000 | $1,500 |
| Missouri | $2,100 | $4,200 | $1,200 |
| Montana | $2,400 | $4,800 | $2,400 |
| Nebraska | $132 | $264 | $132 |
| Nevada | No state income tax | ||
| New Hampshire | State Income Tax of 5% on Dividends and Interest Income Only | ||
| New Jersey | $1,000 | $2,000 | $1,500 |
| New Mexico | $4,050 | $8,100 | $4,050 |
| New York | $00 | $00 | $1,000 |
| North Carolina | $00 | $00 | $00 |
| North Dakota | $4,050 | $8,100 | $4,050 |
| Ohio | $2,250 | $4,500 | $2,250 |
| Oklahoma | $1,000 | $2,000 | $1,000 |
| Oregon | $197 | $394 | $197 |
| Pennsylvania | No exemptions | $00 | $00 |
| Rhode Island | $3,900 | $7,800 | $3,900 |
| South Carolina | $4,050 | $8,100 | $4,050 |
| South Dakota | No state income tax | ||
| Tennessee | State Income Tax of 6% on Dividends and Interest Income Only | ||
| Texas | No state income tax | ||
| Utah | 6% tax credit | 6% tax credit | 6% tax credit |
| Vermont | $4,050 | $8,100 | $4,050 |
| Virginia | $930 | $1,860 | $930 |
| Washington | No state income tax | ||
| West Virginia | $2,000 | $4,000 | $2,000 |
| Wisconsin | $700 | $1,400 | $700 |
| Wyoming | No state income tax | ||
| Note: For complete notes and annotations, please see the source below. Source: Tax Policy Center, "Individual State Income Tax Rates 2000-2017," accessed October 26, 2017 | |||
See also
External links
Footnotes
- ↑ Investopedia, "Income tax," accessed September 26, 2014
- ↑ Brunori, D. (2011). State Tax Policy: A Political Perspective. Washington, D.C.: The Urban Institute Press
- ↑ Investopedia, "Can moving to a higher tax bracket cause me to have a lower net income?" accessed November 13, 2014
- ↑ Investing Answers, "Marginal Tax Rate," accessed November 13, 2014
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ Tax Foundation, "2017 Tax Brackets," November 10, 2016
- ↑ Tax Policy Center, "Individual State Income Tax Rates 2000-2015," accessed September 29, 2015
- ↑ The Balance, "States With Flat Income Tax Rates for 2019," accessed December 1, 2019
- ↑ Tax Policy Center, "What is the personal exemption?" accessed December 14, 2015
- ↑ Internal Revenue Service, "3. Personal Exemptions and Dependents," accessed December 14, 2015
