Top State Individual Marginal Income Tax Rates – 2019

Given progressive federal income tax rates in the U.S., almost everyone is aware that the more an individual makes, the greater their probable income tax burden (depending on deductions).  Where a person lives, however, can also impact potential income taxes given state and in some instances local assessments.

We all agree that state and local governments must be adequately funded, but there will never be an agreement on what services and benefits state and local governments should make available.   Those providing more benefits and services will need greater tax burdens to pay for those services.  Hence their constituents (at least some) will have to pay more.

When it comes to state government revenues, income taxes account for 37 percent of all state receipts.  The Tax Foundation reports the following metrics on state income taxes:

  • Seven states have no state income tax whatsoever: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming
  • Two states, while not having an income tax, do tax dividend and interest income: New Hampshire and Tennessee
  • 41 States have an income tax, of which:

nine have a single tax rate, with one rate applying to all levels of income

32 states levy graduated-rate income taxes, with a varying number of tax brackets.   Hawaii, with 12 different tax brackets, has the most

The next table lists the top state marginal income tax rates both alphabetically and sorted from greatest to least.  It also likely that the states with the greatest state and local tax burdens will be most adversely impacted by the cut in the ability to deduct more than $10,000 in state and local taxes from gross revenue for federal income purposes.

To read the entire Tax Foundation study detailing state income tax brackets click https://taxfoundation.org/2019-state-individual-income-tax-rates-brackets?utm_source=Tax+Foundation+Newsletters&utm_campaign=909c99ecf5-EMAIL_CAMPAIGN_2019_02_06_03_53_COPY_04&utm_medium=email&utm_term=0_8387957ec9-909c99ecf5-427662773&mc_cid=909c99ecf5&mc_eid=c79ab314e3

Just because a state has no income tax does not necessarily imply that taxes overall are minimal.  Other primary revenues for government include corporate income taxes, property taxes and retail sales taxes.  To review the comparative impact of five primary taxes by state, read the Stewart blog summarizing another Tax Foundation study at http://blog.stewart.com/stewart/2018/10/08/best-state-business-tax-environments-2019-tax-foundation/

As several have said in the past, “Two things are certain: death and taxes,” and April 15th is rapidly approaching.

Ted

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