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American State and Municipal Taxation

     State and municipal taxes are imposed autonomously and independently from federal taxes. Hence, they are generally treated as deductibles for the federal tax calculations. Much like the federal government, state and municipalities tax income, ranging from 0% - 13.3%. Of the 50 states, 43 impose income taxes on individuals. The seven states that do not impose an individual income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Washington. Most of the time states have a fixed rate for all levels of income, but there are some that use a graduated tax system. The rules are generally aligned with federal conceptions of taxes and taxable income, but there are many variations across states. Furthermore, certain states allow individual cities and municipalities to impose their own income taxes as well. Many states also administer income taxes for corporations. Similar to the federal government, the state also uses withholding taxes for their income taxes.

 

     Most jurisdictions have some form of property tax imposed on all land, buildings, and property improvements. This tax is based on the fair market value of the property. The particulars to the property taxes vary greatly between states and jurisdictions. States also impose taxes on various sales goods. These goods include groceries, prepared food, prescription drugs, non-perscription drugs, and clothing. Not all states tax on all of these categories. The tax amounts and the types of goods taxed varies between states. For example, Kansas and Mississippi tax in all of these, but Delaware taxes in none of these categories. Lastly, some states and municipalities also impose various estate, gift, and excise taxes.