Map: State and Local Individual Income Tax Collections Per Capita

May 8, 2014

Liz Malm

Liz Malm,

States depend on a variety of sources for tax revenue, but one of the most common are individual income taxes. This week’s map shows state and local combined individual income tax collections per person in 2011 (the latest data available).

Click on the map to enlarge it.

This category includes broad-based taxes on wage and salary income, as well as taxes on specific types of income (such as investment income taxes on interest and dividend income). Most states that levy an income tax have the broad-based, former type, but a few states (namely New Hampshire and Tennessee) only tax investment income. Six states have no individual income taxes (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming).

On average, state and local governments collect $918 per person from individual income taxes—but some states differ significantly from this trend. New York collects the highest, coming in at $2,289 per person. Maryland follows, with $1,823 per person. Rounding out the top ten are Connecticut, Massachusetts, Oregon, Minnesota, Delaware, California, New Jersey, and Virginia.

Among that state that levy income taxes (excluding no-income tax states), Tennessee and New Hampshire collect the least per person ($30 and $63, respectively). This is because these states have narrow income tax bases, taxing only investment income. Among states with more broad-based income taxes on wage income, Arizona collects the least per person ($445), followed by Mississippi ($470), Louisiana ($527), and New Mexico ($529).

Individual income taxes tend to be a state-level tax—91 percent of combined state and local collections in the U.S. are levied at the state level. Only 13 states collect local income taxes, but some of these obtain a sizeable share of local-level government taxes from this source. For example, 30.4 percent of local tax collections in Maryland come from local income taxes. Similar states include Kentucky (24.9 percent of local tax collections are derived from local income taxes), Ohio (21.3 percent of total local tax collections), Indiana (19.6) Pennsylvania (17.5 percent), and New York (10.8 percent). For more information on local income taxation, see this report from 2011. For an example of the complicated nature of local income tax systems see, this testimony before Ohio’s House of Representatives Ways and Means Committee.

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The Committee on Ways and Means, more commonly referred to as the House Ways and Means Committee, is one of 29 U.S. House of Representative committees and is the chief tax-writing committee in the U.S.

The House Ways and Means Committee has jurisdiction over all bills relating to taxes and other revenue generation, as well as spending programs like Social Security, Medicare, and unemployment insurance, among others.

A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.

The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates.

An individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S.