What State Income Tax Amount Should I Pay?

The U.S. government provides many essential services to its citizens, such as defense, Social Security, and the maintenance of national parks. It finances these national operations in large part by collecting personal income taxes. Individual states provide government services such as welfare. Most also use income tax to finance these efforts. The amount of state income tax that you should pay depends on your location and your earnings.

According to the Federation of Tax Administrators, you should pay no personal income taxes in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. In New Hampshire and Tennessee, the only personal income on which you pay taxes are those coming from interest and dividends. And in those cases, the tax rate is a flat five for New Hampshire and a flat six percent for Tennessee.

All other states impose a personal income tax that is based on the amount of money you earn. For example, according to the Federation of Tax Administrators for 2011, Iowa starts with a 0.36 percent rate on annual incomes of $1,439 or under. The state has eight different tax rates, ending with 8.98 percent on incomes above $64,755. In contrast, Massachusetts and Michigan keep calculations simple with flat rate percentages of 5.3 and 4.35 on all incomes.

According to Kiplinger, the states with the highest income tax rates are California, Hawaii, Iowa, New York, and Oregon. Of these, California’s tax burden is the highest. It starts with a personal income tax rate of 1.25 percent rate for yearly earnings up to $7,300 and ends with a 9.55 percent rate for incomes at $47,767 or higher.

Like the Federal government, many states allow deductions on gross personal income, which affects the tax that you pay. More deductions equals a lower net personal income, which ultimately reduces the state income tax you should pay. You can itemize these deductions or take a standard one. In California, for example, taxpayers can take a standard deduction of $3,670 for individuals and $7,340 for married couples or domestic partners who are filing jointly. In Iowa, the standard deduction is $1,810 for individuals and $4,460 for married couples filing jointly. The amounts for both states are as of 2010.

Exemptions reduce the taxes you should pay by reducing your income based on the people whom you support. In Mississippi, for example, you can take an exemption of $6,000 if you are single or $12,000 if you are married, plus $1,500 for each dependent child. New York has no single or married exemptions but allows $1,000 for each dependent child.