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State Individual Income Tax Rates and
Brackets for 2016
By Nicole Kaeding
Economist
Feb. 2016
No. 500
Key Findings
·
Individual income taxes are a major source of state government revenue,
accounting for 27 percent of state tax collections.
· Forty-three states levy individual income taxes. Forty-one tax wage and salary
income, while two states—New Hampshire and Tennessee—exclusively tax
dividend and interest income. Seven states levy no income tax at all.
· Of those states taxing wages, eight have single-rate tax structures, with one rate
applying to all taxable income. Conversely, 33 states levy graduated-rate income
taxes, with the number of brackets varying widely by state.
· States’ approaches to income taxes vary in other details as well. Some states
double their single-bracket widths for married filers to avoid the “marriage
penalty.” Some states index tax brackets, exemptions, and deductions for inflation;
many others do not. Some states tie their standard deductions and personal
exemptions to the federal tax code, while others set their own or offer none at all.
2
Individual income taxes are a major source of state government revenue, accounting for 27
percent of state tax collections.1 Their prominence in public policy considerations is further
enhanced by the fact that individuals are directly responsible for filing their income taxes, in
contrast to the indirect payment of sales and excise taxes. To many taxpayers, the personal
income tax is practically synon