Important State Tax Information
Frequently Asked Questions
How do you file state taxes?
The starting point is your federal return. You’ll want to be sure that it’s accurate and complete before you begin preparing your state income tax return. Begin making adjustments after you've entered the information from your federal return onto your state return. You must reconcile the differences between your federal taxable income and your state taxable income.
When are state taxes due?
State tax filing deadlines differ from state to state. However, many state tax due dates are the same as the federal tax due date, which is normally April 15. In 2022, however, the federal tax deadline was extended to April 18 (or April 19 if you lived in Maine or Massachusetts).
How can you file your state taxes for free?
While not necessarily free, there are a few ways to file state taxes in the cheapest way possible. One is to file directly through your state through their respective websites. While some states impose restrictions on who can file for free, residents of several states and Washington, D.C. might be able to file for free via state-provided forms or through the Free File Alliance. Other ways include IRS Free File and getting discounts from tax software providers.
Which state has the highest sales taxes?
California has the dubious honor of having the highest statewide sales tax rate at 7.25%. It's followed by Indiana, Mississippi, Rhode Island, and Tennessee at 7%, Minnesota at 6.875%, Nevada at 6.85%, and New Jersey at 6.625%.
E-File is the term for electronic filing or sending your income tax return from tax software via the Internet to the IRS or state tax authority. It's simple and efficient and has become increasingly popular since it was introduced nationally in 1990. In 2021, more than 90% of federal taxes were filed electronically.
A tax you pay directly to the government is known as a direct tax. For example, federal income tax is a common direct tax. Direct taxes must be paid by the person or entity that incurred them, unlike indirect taxes, which can be passed on to others.
Reciprocal tax agreements allow residents of one state to work in other states without having taxes for that state withheld from their pay. They would not have to file nonresident state tax returns there, assuming they follow all the rules.
Property Tax Assessment
A property tax assessment is a professional estimation of the market value of residential or commercial real estate. Local governments use your assessment as the basis for calculating your annual property tax bill. Assessments are usually prepared on a specific date each year, and they're often based on recent sales of comparable properties in the area.
A mill rate, often referred to as a millage rate, is used to calculate property taxes by multiplying it by the value of a property. A mill is one one-thousandth of a dollar, and in property taxes, 1 mill equals $1 per each $1,000, and 1 mill also equals 0.1%. All states and Washington, D.C. impose property taxes but not always at the state level. Many do so at the municipal or county level.
An excise tax is considered to be a “narrowly based” or “indirect” tax because it’s levied on certain products or services, not on a specific person. Excise taxes aren’t exclusively imposed by the U.S. federal government. All states and some municipalities levy some form of excise tax.
The Internal Revenue Code (IRC) conformity refers to the degree to which state tax codes conform to the federal tax code. Most states conform in some respects but some choose not to adopt all federal provisions. The degree to which different states conform to the IRC can produce significant differences in tax liability from state to state when compared to the federal level.
A flat tax is a system that levies the same fixed percentage rate on every citizen regardless of their income. Most flat tax systems exempt those living below the poverty line. Some U.S. states use a flat tax system, as do several nations, including Russia, Latvia, and Lithuania. The U.S. federal government uses a progressive income tax system, in which the percentage of taxes owed increases with the income of the taxpayer.
Gasoline Excise Tax
The federal gasoline excise tax was first introduced in 1933 at just one cent per gallon. The tax pays for transportation-related infrastructure projects, as well as mass transportation costs across the U.S. Each state additionally tacks its own tax onto every gallon of gas that’s sold there. According to the American Petroleum Institute, the states with the highest gas taxes as of January 2022 were California and Pennsylvania.
Tax Foundation. "State and Local Sales Tax Rates."
Internal Revenue Service. "Returns Filed Taxes Collected and Refunds Issued."
Tax Foundation. "How To Calculate Property Tax Liability."
American Petroleum Institute. "Gasoline Tax."