In addition to federal income tax collected by the United States, most individual U.S. states collect a state income tax. Some local governments also impose an income tax, often based on state income tax calculations. Forty-two states and many localities in the United States impose an income tax on individuals. Eight states impose no state income tax, and a ninth, New Hampshire, imposes an individual income tax on dividends and interest income but not other forms of income. Forty-seven states and many localities impose a tax on the income of corporations.
State Tax Burdens 2022 % of income
The average effective state and local taxes for all states for different income groups. Sales taxes and excise taxes (blue), property taxes (green), state income taxes (red), and total taxes (clear).
Total State Government Tax Revenue By Type in 2020
Income tax in the United States
The United States federal government and most state governments impose an income tax. They are determined by applying a tax rate, which may increase as income increases, to taxable income, which is the total income less allowable deductions. Income is broadly defined. Individuals and corporations are directly taxable, and estates and trusts may be taxable on undistributed income. Partnerships are not taxed, but their partners are taxed on their shares of partnership income. Residents and citizens are taxed on worldwide income, while nonresidents are taxed only on income within the jurisdiction. Several types of credits reduce tax, and some types of credits may exceed tax before credits. Most business expenses are deductible. Individuals may deduct certain personal expenses, including home mortgage interest, state taxes, contributions to charity, and some other items. Some deductions are subject to limits, and an Alternative Minimum Tax (AMT) applies at the federal and some state levels.
Total U.S. tax revenue as a % of GDP and income tax revenue as a % of GDP, 1945–2011, from Office of Management and Budget historicals
The U.S. federal effective corporate tax rate has become much lower than the nominal rate because of various special tax provisions.
People filing tax forms in 1920.
President Abraham Lincoln and the United States Congress introduced in 1861 the first personal income tax in the United States.