What does a state's department of taxation do?


Quick Answer

State tax departments impose relevant income taxes, notes the Tax Policy Center. The definition of taxable income varies by state, and certain states even follow the federal definition.

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Full Answer

As of 2015, certain states apply a single tax rate to all income, notes the Tax Policy Center. Other states utilize multiple tax brackets and rates. Each individual state tax department relies on taxes as a source of revenue. Moreover, certain local governments within states impose taxes as well. Taxpayers must also note the treatment of capital gains, as certain state tax departments set forth different regulations for this tax. For instance, some states adopt a flat rate, whereas other states offer the more preferential rate.

Some of the common state tax departments include the Alabama Department of Revenue, the California State Board of Equalization, the Florida Department of Revenue, Maine Revenue Services and the Mississippi Tax Commission. Taxpayers can find a full list of state tax departments through the American Institute of CPA website.

The Internal Revenue Service also offers a website that links to further information for each state tax department. Taxpayers can use tax software to access all state forms and complete state returns, lists the TurboTax website. Taxpayers must have the Adobe Reader software to view the relevant state tax forms.

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