State and Local Individual Income Tax Collections Per Capita
by Katherine Loughead, Tax Foundation, May 31, 2018
The individual income tax is one of the most significant sources of revenue for state and local governments, accounting for 23.5 percent of state and local tax collections in fiscal year (FY) 2015 (the most recent data available). Other significant sources of state and local revenue include property taxes, which accounted for 31.1 percent of state and local tax collections, as well as general sales taxes, which matched the individual income tax at 23.5 percent of state and local tax collections.
The below map shows combined state and local individual income tax collections per capita for each state in FY 2015. Forty-one states and the District of Columbia levy broad-based taxes on wage income and investment income, while two states – New Hampshire and Tennessee – tax investment income but not wage income. Tennessee’s tax on investment income – known as the “Hall tax” – is in the process of being phased out and will be fully repealed by 2021. Seven states do not levy an individual income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
On average, state and local governments collected $1,144 per person from individual income taxes, but collections varied widely from state to state. States collecting the most in per capita state and local individual income taxes were New York ($2,789), Connecticut ($2,279), and Maryland ($2,200). The lowest per capita individual income tax collections occurred in the states that tax dividend and interest income but not wage income: Tennessee ($46) and New Hampshire ($72). Of the states that tax wage income, lowest per capita collections occurred in Louisiana ($639), Mississippi ($596), and Arizona ($551).