State Individual Income Tax Rates and Brackets for 2016
by Nicole Kaeding, Tax Foundation, February 8, 2016
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.
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 synonymous with their own tax burdens.
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. Kansas, for example, imposes a two-bracket income tax system. At the other end of the spectrum, two states—California, and Missouri-- have 10 tax brackets. Top marginal rates range from Pennsylvania’s 3.07 percent to California’s 13.3 percent.
In some states, a large number of brackets are clustered within a narrow income band; Missouri taxpayers reach the state’s tenth and highest bracket at $9,001 in annual income. In other states, the top marginal rate kicks in at $500,000 (New Jersey) or even $1,000,000 (California, if one counts the state’s “millionaire’s tax” surcharge).
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. In the following table, we provide the most up-to-date data available on state individual income tax rates, brackets, standard deductions, and personal exemptions for both single and joint filers.
Notable Individual Income Tax Changes in 2016
Several states changed key features of their individual income tax codes between 2015 and 2016. These changes include:
- Arkansas lowered its top marginal rate from 7 percent to 6.9 percent on income over $35,100. Also, it adopted a new tax schedule for individuals earning between $21,000 and $75,000 in income. The state now has three tax schedules, with differing rates, depending on income.[2]
- Temporary tax increases expired in Hawaii. The three top rate brackets were eliminated, and the top marginal rate fell from 11 percent to 8.25 percent.[3]
- Maine lowered tax rates and added a third tax bracket. Rates were cut from 6.5 and 7.95 percent to 5.8, 6.75, and 7.15 percent.[4]
- Massachusetts’s rate fell from 5.15 percent to 5.1 percent.[5]
- Ohio’s tax rates decreased with the top marginal rate falling from 5.333 to 4.997 percent.[6]
| |
|
SINGLE |
|
|
MARRIED |
|
| Hawaii |
1.40% |
> |
$0 |
1.40% |
> |
$0 |
| |
3.20% |
> |
$2,400 |
3.20% |
> |
$4,800 |
| |
5.50% |
> |
$4,800 |
5.50% |
> |
$9,600 |
| |
6.40% |
> |
$9,600 |
6.40% |
> |
$19,200 |
| |
6.80% |
> |
$14,400 |
6.80% |
> |
$28,800 |
| |
7.20% |
> |
$19,200 |
7.20% |
> |
$38,400 |
| |
7.60% |
> |
$24,000 |
7.60% |
> |
$48,000 |
| |
7.90% |
> |
$36,000 |
7.90% |
> |
$72,000 |
| |
8.25% |
> |
$48,000 |
8.25% |
> |
$96,000 |
FISCAL FACT No. 500: State Individual Income Tax Rates and Brackets for 2016 (PDF)
State Individual Income Tax Rates and Brackets for 2016 (EXCEL)
[1] “State and Local Government Finance, Fiscal Year 2013.” Census Bureau. 2015.http://www.census.gov/govs/local/.
[2] Malm, Liz. “Arkansas Lawmakers Enact (Complicated) Middle Class Tax Cut.” Tax Foundation. March 9, 2015. http://taxfoundation.org/blog/arkansas-lawmakers-enact-complicated-middle-class-tax-cut.
[3] Yamachika, Tom. “Year End Tax Planning Tips.” Tax Foundation of Hawaii. November 23, 2015. http://www.tfhawaii.org/wordpress/blog/2015/11/year-end-tax-planning-tips/.
[4] Mistler, Steve. “After Long, Fierce Fight, Maine Gets a Budget and Avoids a Shutdown.” Portland Press Herald. June 30, 2015.http://www.pressherald.com/2015/06/30/house-overrides-lepage-budget-veto/.
[5] “Massachusetts Tax Rates.” Massachusetts Department of Revenue. 2016.http://www.mass.gov/dor/all-taxes/tax-rate-table.html.
[6] Tax Rates, Ohio Code, 57(2016), §5747.02(3).