Sunday, January 11, 2009

How progressive is your state income tax?

The Tax Foundation has published its annual update of state income tax systems around the country.

(If the link above doesn't work, then paste the following into your browser:

You can see how your home state compares with New York State. If you are considering job offers in different parts of the country, you can compare the rate structure in different states.

A few caveats are in order:

1) Virtually all states are facing a budget crunch due to the current economic downturn. Since states face much tighter constraints to balance their budgets than the federal government, some states will likely consider increasing tax rates this year.

2) Some states also give local government units (cities, towns, counties) the option of imposing their own local income taxes. New York is one such state, and residents of New York City and Yonkers face substantial additional local income taxes on top of their New York State income tax obligation.

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