State Income Tax Definition

Term Definition
Income tax levied by individual U.S. states based on earned income. States use these funds for education, health care, and other needs. Not all states have state income tax, and the percentage rates vary.

Extended Definition
Like federal income tax, state income tax is a payroll liability deducted from an employee’s paycheck. Employers must remit this liability according to the required time-frame for their business.

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