State Income Tax — Payroll Definition
What is State Income Tax? Clear definition and explanation for payroll professionals, HR managers, and employees.
What is State Income Tax (SIT)?
State Income Tax (SIT) is tax withheld by your employer on behalf of your state government. Nine states have no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. The remaining 41 states and D.C. have rates ranging from about 1% to 13.3% (California). Some states use a flat rate (e.g., Illinois at 4.95%), while others use progressive brackets. Your state tax is determined by where you LIVE, not where your office is located (with some exceptions for reciprocal agreements).