For both individuals and corporations, taxable income differs from-and is less than-gross income. Of those states taxing wages, 11 have single-rate tax structures, with one rate applying to all taxable income Taxable income is the amount of income subject to tax, after deductions and exemptions.
Seven states levy no individual income tax at all.
New Hampshire exclusively taxes dividend and interest income while Washington only taxes capital gains income. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S.Įs are a major source of state government revenue, accounting for 40 percent of state tax collections in fiscal year 2020, the latest year for which data are available. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. imposes a progressive income tax where rates increase with income.
