How much state tax do I owe?

If you’re a US taxpayer asking, “How much state tax do I owe?”, you’re not alone. Calculating your state tax liability can seem confusing, but it comes down to a clear formula. This guide is for anyone looking to understand their 2025 state tax bill, find their tax rate, and learn how to calculate their final payment accurately.

The simplest answer is: Your state tax is your state’s tax rate applied to your taxable income, minus any credits. Your final bill depends on your unique financial situation and, most importantly, the state you live in.

How to Calculate Your State Income Tax: A Step-by-Step Guide

Follow these four steps to get a reliable estimate of what you owe. The key is to find your taxable income first, not just your total salary.

Step 1: Determine Your Adjusted Gross Income (AGI)

Start with your total income for the year (wages, freelance income, investment returns). Then, subtract specific federal adjustments like student loan interest or retirement account contributions to find your AGI. You can find this on your federal tax return.

Step 2: Calculate Your State’s Taxable Income

Take your AGI and subtract either the state standard deduction or your itemized deductions (like mortgage interest or charitable donations). Choose whichever is larger to lower your taxable income. The result is your state taxable income, the amount you’ll actually be taxed on.

Step 3: Apply Your State’s Tax Rate

Find your state’s current tax rate. States use either a flat rate or progressive tax brackets. Apply this rate to your taxable income. For most people, using a trusted tax software like TurboTax can simplify this step, as it has all state forms and rates built-in.

Step 4: Subtract State Tax Credits to Find Your Final Bill

Finally, subtract any state-specific tax credits you qualify for. Unlike deductions, credits reduce your tax bill dollar-for-dollar. Common credits are for childcare, education expenses, or clean energy improvements. The remaining amount is what you owe.

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Real-Life Example: Calculating State Income Tax

Let’s see how this works for two different people.

Example 1: Flat Tax State (Colorado)

• Person: Sarah, single filer.
• Gross Income: $70,000
• State Tax System: Colorado has a flat tax rate of 4.40%.
• Calculation:
  1. Taxable Income: $70,000 (Gross Income) – $15,000 (Deductions) = $55,000
  2. Initial Tax: $55,000 (Taxable Income) x 4.40% (Tax Rate) = $2,420
  3. Final Tax Bill: Sarah has a $100 state education credit. $2,420 – $100 = $2,320 owed.

Example 2: Progressive Tax State (California)

• Person: David, single filer.
• Gross Income: $90,000
• State Tax System: California uses progressive brackets (rates are simplified for this example).
• Calculation:
  1. Taxable Income: $90,000 (Gross Income) – $15,000 (Deductions) = $75,000
  2. Initial Tax: California taxes income in chunks.
     • The first ~$10k is taxed at 1%.
     • The next chunk up to ~$45k is taxed at 6%.
     • The income from ~$45k to $75k is taxed at 8%.
     • This complex calculation results in a total tax of roughly $3,750. David can then subtract any credits he qualifies for.

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States With No Income Tax in 2025

Some states don’t have a personal income tax at all, which means residents there don’t have to file a state return for their wages.

• Alaska
• Florida
• Nevada
• New Hampshire (taxes interest and dividends, but not wages)
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

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Frequently Asked Questions (FAQ)

What is the easiest way to find my state’s tax rate?

The most reliable source is your state’s official Department of Revenue or Franchise Tax Board website. Search for “[Your State] income tax rates 2025.” Tax software also has this information automatically updated.

How is a tax credit different from a tax deduction?

A deduction lowers your taxable income, reducing the amount of income subject to tax. A credit is more powerful—it directly reduces your final tax bill on a dollar-for-dollar basis. A $500 credit saves you $500.

Why do I owe state taxes if I work remotely?

Generally, you owe income tax to the state where you live and perform the work (your “domicile” state), regardless of where your company’s office is located. Some states have specific rules, so it’s important to check.

What happens if I lived in two different states last year?

You will need to file a part-year resident return for each state you lived in. You’ll report the income you earned while living in that specific state on each respective return to avoid being double-taxed.

Can I get an extension for filing my state taxes?

Yes, most states offer a filing extension, typically for six months. However, an extension to file is not an extension to pay. You must still estimate and pay the tax you owe by the original deadline (usually April 15th) to avoid penalties.

Do all states have a standard deduction?

Most states do, but not all. Some states link their standard deduction amount to the federal amount, while others set their own. A few states have no standard deduction, requiring you to itemize deductions to reduce your taxable income.