As Americans work to figure out their rates to file their returns, many want to know the differences between state and federal tax brackets.
There are differences between state and federal taxes.
Federal vs. State taxes
The differences are where your tax funds go.
Federal taxes go toward the federal government, and state taxes go toward the state government.
7 states do not collect state taxes.
- South Dakota
Tennessee and New Hampshire collect state taxes on unearned income.
Federal taxes come out of income and capital gains.
State taxes are always less than federal taxes.
Federal income taxes are broken into brackets so the amount you pay on income is fair.
There are rates in place to pay less on income in lower brackets.
Higher rates mean higher taxes.
There are fewer state tax brackets and lower tax rates.
They differ by state.
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