State Income Tax
Webmasters must pay state income tax in the state that they reside. Not all states in the U.S. have an income tax, but most of them do. The state income tax is not the same as the federal income tax. Living in a state like Nevada, which has no state income tax, does not mean you don’t have to file federal taxes. If you live in a state that has an income tax, you must pay both the state income tax and the federal income tax.
Unlike the Federal Income Tax, which can go as high as 35%, the highest state income tax in the U.S. is in California, which imposes an 11% tax on earnings over $250,000. Like the federal income tax, most states have a progressive tax system where those who earn more money pay a higher percentage. Someone in New Jersey (which is one of the highest taxed states) has to pay 1.4% on earnings up to $20,000 and 1.75% for earnings between $20,001-$35,000. The lower state income tax brackets are typically quite low. You’ll start feeling the tax pinch once you start earning over 100K.
Since each state has their own tax brackets – it’s not practical to list them all here. Salary.com does a great job profiling each state and its different tax rates. You can view the profile for New Jersey below, and from there you can pull up information about other states.
http://swz.salary.com/salarywizard/layouthtmls/swzl_statetaxrate_nj.html
The following states have no state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.
New Hampshire doesn’t have a state income tax, but has a business profits tax.