California, Connecticut, New York, New Jersey and Washington, D.C., ranked among the U.S. jurisdictions with the most progressive individual income tax systems, according to a recent Tax Foundation analysis.
Thirty-three states and the District of Columbia have income tax systems with brackets for different levels of income, the Tax Foundation said, but California, Connecticut, New York, New Jersey and the District of Columbia were found to have at least six tax brackets, each with broad income ranges, and top marginal thresholds on income of between $500,000 and $1 million.
Michigan is among 10 states that have a flat income tax.
Among the states with income tax rates that increase with income level, the number of brackets and top rates vary substantially, the study found.
Four states – New York, Connecticut, Arkansas and Nebraska – require many of their top income earners to pay the top tax rate on all their income, not just their marginal income that exceeds a certain threshold, according to the Tax Foundation study.
How Do States With Progressive Income Taxes Measure Up?
|State||Number of Brackets||Top Income Threshold|
|Arkansas (a) (b)||6||$35,099|
|North Dakota (b)||5||$424,950|
|Rhode Island (b)||3||$149,150|
|South Carolina (b)||5||$14,650|
|(a) Brackets apply to individuals earning more than $75,000. Two special rate schedules exist for low- and middle-income individuals: one for individuals below $21,000 in income (which has four brackets), and one for those between $21,000 and $75,000 in income (which has six brackets). (b) Bracket levels are adjusted for inflation each year.|
Source: Tax Foundation; state tax forms and statutes; Bloomberg BNA