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 We've put together a lot of information on federal income tax brackets, so here were going to add to the income tax story with a listing of state income tax rates. Keep in mind that state income tax is not the end of your tax bill, because there are a couple of little things called property tax and sales tax that come into play too.
State Income Taxes
In fact, that brings us to the pros and cons of taxes of any kind. It's really one of those pay me now or pay me later examples. If your state collects a lot of income taxes, then the money is going somewhere right? Hopefully for state-run programs that help those less fortunate than you.
Sources and Use of Government Funding
In many states, income taxes are one of the primary sources of educational funding as well as funding for many essential services such as police and fire protection. For example, half the money needed to run your town's high school might come from state income taxes and the other half from property taxes.
If you live in a state where the property taxes are low, the income tax rate is low and sales tax is reasonable, then something has to give - and it's probably the educational system in your particular state.
State Income Tax Tables
The state income tax tables also help to explain why some states are popular as retirement communities. For example, one reason Florida is popular with the senior citizens is not only because of the climate, but also because there is no state income tax. On the other hand, despite the fact that Nevada has no state income tax, they've got a large gambling industry that does pay taxes. So the table can be misleading at times, especially if there is a dominant industry in the state.
State Income Tax Trivia
But before you get to the tax rates, we'd like to share some state income tax trivia. This way taxes almost seem like "fun." (Yeah, right.)
- There are currently seven states that do not collect any state income taxes at all - Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.
- There are two states that only collect income taxes on dividends and interest income - New Hampshire and Tennessee.
- Vermont and California have the highest incremental state tax rate - 9.5% and 9.3% respectively.
- Six states have only one income tax bracket, charging its residents one rate on all income, which is called a flat rate - Colorado (4.63%), Illinois (3.0%), Indiana (3.4%), Massachusetts (4.35%), Michigan (3.9%), Pennsylvania (3.07%), and Utah (5.0%).
- Missouri has the largest number of tax brackets (10) ranging from 1.5 - 6.0%.
State Income Tax Tables
State income tax tables are like federal income tax rates, but putting them all in one place is a challenge. That's because the number of tax brackets and the ranges of income and the tax rates themselves vary quite a bit from state to state. If you want an at-a-glance view of the income taxes for each state, then take a look at the table below.
Individual State Income Tax Rates 2008
| State |
Tax Rate |
Brackets |
Bracket Range |
| Alabama |
2.0 - 5.0% |
3 |
$500 - 3,000 |
| Alaska |
None |
|
|
| Arizona |
2.59 - 4.54% |
5 |
$10,000 - 150,000 |
| Arkansas |
1.0 - 7.0% |
6 |
$3,699 - 31,000 |
| California |
1.0 - 9.3% |
6 |
$6,827 - 44,815 |
| Colorado |
4.63% |
1 |
Flat Rate |
| Connecticut |
3.0 - 5.0% |
2 |
$10,000 - 10,000 |
| Delaware |
2.2 - 5.95% |
6 |
$5,000 - 60,000 |
| Florida |
None |
|
|
| Georgia |
1.0 - 6.0% |
6 |
$750 - 7,000 |
| Hawaii |
1.4 - 8.25% |
9 |
$2,400 - 48,000 |
| Idaho |
1.6 - 7.8% |
8 |
$1,237 - 62,055 |
| Illinois |
3.0% |
1 |
Flat Rate |
| Indiana |
3.4% |
1 |
Flat Rate |
| Iowa |
0.36 –8.98% |
9 |
1,343 - 60,436 |
| Kansas |
3.5 - 6.45% |
3 |
$15,000 - 30,000 |
| Kentucky |
2.0 - 6.0% |
5 |
$3,000 - 75,000 |
| Louisiana |
2.0 - 6.0% |
3 |
$12,500 - 25,000 |
| Maine |
2.0 - 8.5% |
4 |
$4,849 - 19,450 |
| Maryland |
2.0 - 4.75% |
4 |
$1,000 - 500,000 |
| Massachusetts |
5.3% |
1 |
Flat Rate |
| Michigan |
4.35% |
1 |
Flat Rate |
| Minnesota |
5.35 - 7.85% |
3 |
$21,800 - 71,591 |
| Mississippi |
3.0 - 5.0% |
3 |
$5,000 - 10,000 |
| Missouri |
1.5 - 6.0% |
10 |
$1,000 - 9,000 |
| Montana |
1.0 - 6.9% |
7 |
$2,500 - 14,900 |
| Nebraska |
2.56 - 6.84% |
4 |
$2,400 - 27,001 |
| Nevada |
None |
|
|
| New Hampshire |
Dividend and Interest Income Only |
|
|
| New Jersey |
1.4 - 8.97% |
6 |
$20,000 - 500,000 |
| New Mexico |
1.7 - 5.3% |
4 |
$5,500 - 16,000 |
| New York |
4.0 - 6.85% |
5 |
$8,000 - 500,000 |
| North Carolina |
6.0 - 7.75% |
4 |
$12,750 - 60,000 |
| North Dakota |
2.1 -5.54% |
5 |
$31,850 - 349,701 |
| Ohio |
0.618 - 6.24% |
9 |
$5,000 - 200,000 |
| Oklahoma |
0.5 - 5.5% |
7 |
$1,000 - 8,701 |
| Oregon |
5.0 - 9.0% |
3 |
$2,900 - 7,300 |
| Pennsylvania |
3.07% |
1 |
Flat Rate |
| Rhode Island |
25% of Federal Taxes |
|
|
| South Carolina |
0.0 - 7.0% |
6 |
$2,670 - 13,350 |
| South Dakota |
None |
|
|
| Tennessee |
Dividend and Interest Income Only |
|
|
| Texas |
None |
|
|
| Utah |
5.0% |
1 |
Flat Rate |
| Vermont |
3.6 - 9.5% |
5 |
$32,550 - 357,700 |
| Virginia |
2.0 - 5.75% |
4 |
$3,000 - 17,000 |
| Washington |
None |
|
|
| West Virginia |
3.0 - 6.5% |
5 |
$10,000 - 60,000 |
| Wisconsin |
4.6 - 6.75% |
5 |
$9,700 - 145,460 |
| Wyoming |
None |
|
|
| District of Columbia |
4.0 - 8.5% |
3 |
$10,000 - 40,000 |
About the Author - State Income Tax Rates
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