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Global Work Glossary

Lost in a maze of global employment jargon? Find your way out with our handy collection of work and HR terminology

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State Income Tax

What does state income tax refer to?

State income tax is a tax imposed by individual U.S. states and used to fund public services, infrastructure projects, education, and other state-specific initiatives. Some states have a progressive tax while, for others, it is a flat rate.

This tax most often impacts residents, but sometimes affects non-residents who earn income within the state. This means that if an employee lives and works in the same state, they will only need to file one tax return for the year, but if they earn money from another state they may be liable for multi-state taxation.

Companies have to manage multi-state tax if their business operates in more than one state, one of their employees works in more than one state/travels between states, or one of their employees lives in one state and works in another.

To manage state income tax properly, organizations should check each state’s Department of Revenue to understand specific regulations and ensure compliance. You can also use a global HR solution such as Multiplier to automate tax calculations and streamline payments.

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