Editing Taxation in the United States (section)

===State variations===
{{Main|State income tax}}
[[File:Composition of Ohio State Revenue (2007).jpg|thumb|Composition of state and local government tax revenue for sample state of Ohio, 2007<ref>Carl Davis, Kelly Davis, Matthew Gardner, Robert S. McIntyre, Jeff McLynch, Alla Sapozhnikova, [http://itepnet.org/whopays3.pdf "Who Pays? A Distributional Analysis of the Tax Systems in All 50 States"] {{Webarchive|url=https://web.archive.org/web/20120515120630/http://www.itepnet.org/whopays3.pdf |date=2012-05-15}}, Institute on Taxation & Economic Policy, Third Edition, November 2009, p. 87.</ref>]]
[[File:State income tax by type.jpg|thumb|right|Total State Government Tax Revenue By Type in 2020]]

Forty-three [[U.S. state|states]] and many localities in the U.S. impose an [[income tax]] on individuals. Forty-seven states and many localities impose a tax on the income of corporations. Tax rates vary by state and locality, and may be fixed or graduated. Most rates are the same for all types of income. State and local income taxes are imposed in addition to federal income tax. State income tax is allowed as a [[State and local tax deduction|deduction]] in computing federal income, but is capped at $10,000 per household since the passage of the [[Tax Cuts and Jobs Act of 2017|2017 tax law]]. Prior to the change, the average deduction exceeded $10,000 in most of the Midwest, most of the Northeast, as well as California and Oregon.<ref name=":0" />

State and local taxable income is determined under state law, and often is based on federal taxable income. Most states conform to many federal concepts and definitions, including defining income and business deductions and timing thereof.<ref>Hellerstein, Jerome H., and Hellerstein, Walter, ''State and Local Taxation, Cases and Materials'', Eighth Edition, 2001 (hereafter "Hellerstein"), p. 929.</ref> State rules vary widely regarding to individual itemized deductions. Most states do not allow a deduction for state income taxes for individuals or corporations, and impose tax on certain types of income exempt at the federal level.

Some states have alternative measures of taxable income, or alternative taxes, especially for corporations.

States imposing an income tax generally tax all income of corporations organized in the state and individuals residing in the state. Taxpayers from another state are subject to tax only on income earned in the state or apportioned to the state. Businesses are subject to income tax in a state only if they have sufficient nexus in (connection to) the state.