State Income Tax
Understand state income tax implications, including rates, calculations, and states without income tax.
Overview
State income tax is a tax imposed by individual U.S. states on the income earned within that state. While most states have an income tax, some, such as Florida, Texas, and Washington, do not. State income tax is deducted from an employee's pay when applicable. Each state has its own tax rates which can vary widely. States with income tax either use a flat rate where everyone pays the same percentage, or progressive rates where the rate increases with higher income levels.
Calculation
State tax calculation can vary as mentioned above. For states that have a progressive rate the withholding form (equivalent of federal W-4) will commonly play a role in addition to frequency of pay and total amount. The information on the withholding form is specific to the employee (Single, Married, etc.).
States without Income Tax
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
FAQs
What state should an employee be taxed in?
There are a lot of factors that can determine this answer. In general, an employee is taxed in the state they are performing the work. However, that is not necessarily always true. Please reach out to OnTheClock's Support team if there is ever a question.
Where is the quarterly return for California?
All state income tax returns are posted within Console under Documents > Tax Documents. These will be posted by the most recent quarter.