State Income Tax
Tax levied by state governments on personal and business income.
State income tax varies dramatically by state—some states like California impose rates up to 13.3%, while others like Texas, Florida, and Wyoming have no state income tax at all. Business owners in multiple states may owe tax in each state where they have nexus. State tax rules often differ significantly from federal rules.
Example
A California-based consultant with $100,000 in taxable income pays roughly $6,000 in state income tax on top of federal obligations.
Why It Matters for Your Business
State income tax can be a major expense depending on where you operate, and understanding rates across states matters for location decisions and multi-state compliance.
Related Terms
More Taxes Terms
Adjusted Gross Income
Gross income minus specific deductions like retirement contributions.
Tax Audit
An examination of tax returns by the IRS to verify accuracy.
Capital Gains
Profit from selling an asset for more than its purchase price.
Capital Loss
Loss from selling an asset for less than its purchase price.
Tax Deduction
An expense that reduces taxable income.
Related Financial Guides & Resources
Automate Your Finances with AI
FiscalInsights uses AI to automate bookkeeping, track expenses, and forecast cash flow — so you can focus on your business.
Start Free Trial