US Taxation on Income, Sales and Property

Each state in the United States has its own taxation system.

There is normally tax on real estate, generally referred to as “property tax”. Taxes on real estate are usually enforced on the real estate’s value by reason of its ownership. For example, the tax on real estate in Texas is enforced on the real estate and specifically on the real estate’s owner as of the first of January of each tax year. The tax is calculated by imposing a tax rate to the real estate’s assessed value as of the tax date. Some other states in the country also implements a tax on real estate transfer. New York is one such state.

There may also be further taxes such as sales tax, income tax and excise tax which includes use tax. Taxable income for specific state purposes is generally based on the federal taxable income but with some specific modifications depending on the state. For example, some of the states in the US apply taxation on gains from municipal bonds obtained from other states that are otherwise not subject to federal income tax. Consequently, this said income must be incorporated in the federal tax income to calculate the amount of income for income tax purposes of a state. States which are primary sources of minerals and oil usually enforce a severance tax. This tax is like the excise tax because the tax is paid on the manufacture of products, and not on the product sales.

There are states which do not impose individual income tax. These include Washington, Texas, South Dakota, Wyoming, Alaska, Nevada and Florida. The states of Tennessee and New Hampshire only enforce interest tax and dividend income tax. The states of New Hampshire, Oregon, Montana and Delaware have no tax on both state and local sales. Alaska permits areas to collect their own sales tax that could reach up to a maximum specified by the state but there is no state sales tax in this state.