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State vs. Federal Taxes Cheat Sheet

Overview

The U.S. tax system includes both ederalnd ste* i*ome taxes, each with distinct rules, rates, and deductions. While federal taxes apply nationwide, state taxes vary significantly.

Key Differences Between State & Federal Taxes

Feature Federal Taxes State Taxes
ax Authority IRS (Internal Revenue Service) State Revenue Departments
ax Rates Progressive (10% – 37%) Varies by state (flat or progressive)
tandard Deduction $15,000 (single), $30,000 (married) Varies by state
ncome Types Taxed Wages, investments, business income Some states exclude certain income types
eductions & Credits Federal deductions apply nationwide State-specific deductions vary

State Income Tax Structures

  • *o Income Tax States:*laska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming.
  • *lat Tax States:*rizona (2.5%), Colorado (4.4%), Illinois (4.95%), North Carolina (4.75%), Utah (4.85%).
  • *rogressive Tax States:*alifornia (1% – 13.3%), New York (4% – 10.9%), Oregon (4.75% – 9.9%).

Federal Tax Brackets (2025)

Tax Rate Single Filers Married Filing Jointly
0% Up to $11,925 Up to $23,850
2% $11,926 – $48,475 $23,851 – $96,950
2% $48,476 – $103,350 $96,951 – $206,700
4% $103,351 – $197,300 $206,701 – $394,600
2% $197,301 – $250,525 $394,601 – $501,050
5% $250,526 – $626,350 $501,051 – $751,600
7% Over $626,350 Over $751,600

Tax Planning Strategies

  1. *onsider State Tax Rates When Moving:*ome states have lower tax burdens.
  2. *aximize Deductions & Credits:*ederal and state deductions can reduce taxable income.
  3. *lan for Retirement Taxation:*ome states exempt retirement income.
  4. *onitor Legislative Changes:*ax laws change frequently at both levels.

Common Pitfalls & How to Avoid Them

  • *gnoring State Tax Obligations:*ven if you move, you may owe taxes in your previous state.
  • *verlooking State-Specific Deductions:*esearch available tax breaks.
  • *ailing to Plan for Dual-State Taxation:*f you work in one state and live in another, tax rules may differ.

Tools & Resources

  • IRS tax calculators for estimating federal liabilities.
  • State tax department websites for local tax rates.
  • Financial advisors for personalized tax strategies.s