State Income Tax
State and local taxes are not included in your federal taxes that you are required to pay. They are a tax in addition to your federal taxes. Out of all the states there are forty three that impose an additional tax known as income tax. Forty seven of them impose income tax on corporations.
State income tax rates are either calculated using a fixed income tax rate or a percentage that will change based on the amount of income earned by an individual or corporation. In most states you will not be taxed on social security income or interest income. Many states will let you either claim the standard deduction for the state or you may itemize your deductions. There are many different credits available when filing your state tax return as well.
Each one creates and oversees its own tax program. A good number of the states collecting tax also oversee and collect local taxes as well. They will impose penalties for filing a late return or for not filing at all. The penalty will usually be a financial penalty which will include interest on unpaid tax bills.
A lot of the same rules concerning federal taxes also apply to the state income tax rules, such as:
- Amount of income
- When you earned the income and when you can take deductions
Your gross income will be all of your earned income and received income. You can reduce the amount of your income by deducting cost of goods sold if you had any for that filing year.