Payroll Tax Percentage Comparisons By State

In addition to the federal payroll tax percentage that is withheld from many workers’s paychecks, many states also require state income tax withholding before the employee is paid. So, here is a brief comparison of how some states compare to others in terms of amounts of withholding taxes that are withheld.

Withholding Taxes Vary from State to State

While the federal income tax system presents a level playing field for all workers in the United States, this is not the case for workers when considering their state income tax. Some workers enjoyed no state income taxes being withheld from their paychecks. For example, states such as: Nevada, South Dakota, Washington and Wyoming do not charge any state income tax for workers in the states.

On the other hand, some states charge very high rates of income tax for residents of that state. For example, states like Alabama, Massachusetts, Minnesota, New Hampshire, Pennsylvania and the District of Columbia all have maximum income tax rates of well over 9%. In addition, Iowa has a maximum income tax rate of 12%. Although many of these states do allow for the deduction of federal income taxes that have been paid, the amount of income taxes paid to state governments can be considerable.

The rest of the states have varying percentage income tax rates that vary between about 2% to 7% on average. Although most states do charge an income tax, there are credits and deductions that can usually be taken to help reduce the amount of income tax that is due and paid.