Individual income taxes are an important source of revenue for state and local governments. In total, 41 states and the District of Columbia levy broad-based income taxes, while two states (New Hampshire and Tennessee) levy limited income taxes on certain types of investment income. Income taxes vary considerably in their structure across states, though the best taxes are fine-tuned to taxpayers’ ability-to-pay. Nationwide, individual income taxes are responsible for 16.2 percent of state and local general revenue as of Fiscal Year 2016.
Read More: How State Personal Income Taxes Work