The majority of states tax the income of its residents. Some states tax only dividend and interest income. Such authority is provided in the state's constitution, which authorizes the taxation of incomes, and the rates of such taxation may be either uniform or graduated, and may be applied to such incomes and with such exemptions as may be provided by law. Many states require the employer to withhold state income taxes. State income taxes may be deducted on federal income tax returns. In 2004, states with no state income tax can have residents deduct sales taxes from their federal income tax return.
State income tax laws define what is included as income, what credit, deductions, and exemptions, etc. apply. Income taxation varies by state, so local laws should be consulted for specific requirements in your area.
