However, it’s essential to consider other taxes, such as sales and property taxes, which may be higher in states without income tax. Being in a state with low or no income tax can be a major financial advantage, but it’s important to look at the full picture state income tax rates when deciding where you might save the most money. Remember to examine all tax implications, including sales, property, and other state-specific taxes and fees.
Filing statuses
- Although no state income tax sounds great in theory, there are some important trade-offs to be aware of.
- Please see Protests and appeals in Part 10 of this publication for additional information.
- For example, in New York, this will be Form IT-370 for a personal income extension, while in the state of Massachusetts, you’d be completing Form M-4868.
- States with flat tax rates apply a single tax rate to all taxable income, regardless of the amount.
- However, states without an income tax often make up for lost revenue through alternative taxation, such as higher sales taxes or property taxes, which can still affect overall cost of living.
- Unlike federal income tax (which applies nationwide), state income tax rates vary significantly from state to state in terms of rates and structures.
Knowing your filing status and what it means is key to filing your tax returns accurately in 2025. Most people who earn income and are residents of a state that imposes an income tax pay state income taxes. Employees should read the instructions on their state’s certificate of withholding form to determine whether or not their state income taxes may be deducted.
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Among states that levy an income tax, the highest top rates are found in California, Hawaii, and New York, where the highest earners may pay over 10% in state taxes. On the other hand, states like North Dakota and Arizona have some of the lowest state income tax rates in the country. Nine states do not impose a state income tax, allowing residents to retain more of their earnings. These states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, QuickBooks and Wyoming.
Sales Tax Rates by State
Still, Connecticut maintains some of the nation’s top public school districts, making it attractive to high-income families with school-age children. However, small business owners and consultants have expressed frustration over audit practices and a shrinking pool of high-income earners post-pandemic. Many residents accept the high taxes in exchange for strong environmental protections and healthcare access, but others—especially retirees—are relocating to New Hampshire or Florida to avoid the ongoing tax climb.
Taxpayers may also be eligible for additional exemptions, such as those for having qualifying dependents or for having paid certain types of medical or dental costs throughout the tax year. The statewide sales tax in Colorado is just 2.90%, lowest among states with a sales tax. However, as anyone who has spent time in Denver, Boulder or Colorado Springs can tell you, actual sales tax rates are much higher in most cities.
The WalletHub study also provides the average annual amount of state and local taxes paid by residents based on their respective state’s median income, giving a better indication of how much these residents pay each year. WalletHub released a new study examining which states had the highest and lowest state and local tax rates to determine where residents are giving the most and least money back to their respective governments. Each system has its advantages and drawbacks, and states choose their approach based on economic goals, revenue needs, and political priorities. Taxpayers should consider their state’s income tax structure when planning their finances, as it can influence take-home pay, cost of living, and overall tax burden.
- Anyone who files a Massachusetts state tax return is given a personal exemption amount based on their tax filing status.
- Part-year residents refer to individuals who either moved to the state and became residents or moved out of the state and ended their residencies within the tax year.
- In the US, individual income is subject to both federal and state tax, along with (in some cases) charges imposed by local governments.
- This category includes metrics such as flag design, symbolism, and history, and contains many groupings of flags based on their colors.
How to track your state tax refund
If the original return was filed prior to the due date, not including any extensions, the original return is considered to be filed on the due date. If an individual and the IRS enter into an agreement to extend the period allowed for claiming a refund of federal income tax, the period for claiming a refund of Colorado income tax is extended by the same amount of time. The individual may file a claim for refund of Colorado income tax at any time within one year following the expiration of the period agreed upon by the taxpayer and the IRS for the claiming of a refund of federal income tax. Since the amended return was not filed within four years of the original return, the refund that may be claimed with the amended return is limited to payments made in the three years preceding the filing of the amended return.
Special rules may apply to military personnel or service members and to those who file jointly with someone who is a resident of Colorado, even if they themselves are not. All income received while a resident, plus income from Colorado sources while a nonresident. Do not include Social Security numbers Financial Forecasting For Startups or any personal or confidential information. We cannot guarantee the accuracy of this translation and shall not be liable for any inaccurate information or changes in the page layout resulting from the translation application tool. This Google™ translation feature, provided on the Franchise Tax Board (FTB) website, is for general information only.
These are tax breaks that are directly subtracted from the final tax liability (e.g., child credits). More than half of the states use graduated, also called progressive, tax systems, where income is taxed at increasingly higher rates as income rises. For example, here’s a breakdown of Alabama’s graduated tax rate of 2% to 5%.