State income tax
State income tax is a tax most U.S. states withhold from wages in addition to federal income tax, each with its own rate and form.
Rates by state
This year's figures for every state, each with its source:
State income tax varies by state: each sets its own rate, wage base, and withholding form. Nine states impose no broad wage income tax as of 2026, though all nine still collect state unemployment insuranceSUTA. SUTA is the state unemployment tax you pay on each employee’s wages up to the state’s wage base, at a rate your state assigns.Click to open the term tax. They are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Setup starts with the actual work location and the employee’s residential address, not the headquarters state. An employee who works across state lines can have wages reported to more than one state.
Where can state wages differ from federal wages?
Many states start from the federal taxable-wages concept, but only as a starting point. Pennsylvania is a documented exception. Reciprocity agreements, part-year residency, and state-specific adjustments can make state wages legitimately differ. State income-tax wages generally have no maximum wage base the way Social Security does. Local income tax, which some cities, counties, and school districts add, does not automatically match federal or state taxable wages. Check these factors before calling a mismatch a payroll error. An occupational privilege tax is a flat local charge, not an income tax.
| TRADITIONAL 401(K) DEFERRAL | FEDERAL | PENNSYLVANIA |
|---|---|---|
| At contribution | Excluded from taxable wages | Included in taxable compensation |
| When taxed | Later, at withdrawal | Now, when contributed |
- Pennsylvania Department of Revenue, Gross Compensation
- IRS, Topic no. 751, Social Security and Medicare withholding rates
General information, not legal or tax advice. Apply current federal and state rules with qualified guidance.