The state exemptions for Tennessee and its neighboring states as reported by the Tax Policy Center are reported in the chart below. Both state and federal taxes allow exemptions. Įxemptions work by reducing the amount of an individual's taxable income. The personal exemption indicates that only a person's income above a certain level is subject to taxation. States that collect a personal income tax allow individuals to claim personal exemptions on income taxes each year. Source: Tax Policy Center, "Individual State Income Tax Rates 2000-2015," accessed September 29, 2015 Note: For complete notes and annotations, please see the source below. State income tax of 6% on dividends and interest income only Because some states are excluded from the rankings and a few share common uppermost rates, there are 34 numerical rankings, with 1 indicating the highest uppermost rate and 34 indicating the lowest. Numerical rankings are tabulated by excluding states with no personal income tax (as well as New Hampshire and Tennessee, which charge income tax only on dividends and interest) and are based on the highest possible tax rate for which an individual might be liable. The table below summarizes personal income tax rates for Tennessee and neighboring states in 2015. Tennessee utilizes a flat personal income tax rate of 6 percent on dividends and interest income only. Tax rates Personal income tax See also: Personal income tax Notably, Tennessee does not levy a broad-based personal income tax (though the state does tax dividends and interest income). The state's tax revenues per capita were $1,803, ranking 49th highest in the United States.
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