Question about state tax?

Question

I recently graduated college and started working. I've worked before, but never full time so I never really cared how much tax I was paying.

But I have a question about something I dont understand. When you pay state tax (btw, I live in NC) does the state tax apply to your entire gross salary, or to your adjusted income on your federal tax return?

For example (these are not real numbers) If you earned $1,000 in a year, but after your federal tax exemptions, your adjusted taxable income was $800. You pay federal tax on $800. What amount do you pay state tax on?

Answer 1

Just look at the forms (state and federal) on www.irs.gov. First of all, your state and federal income may or different be the same on your W-2 that you will receive from your employer, usually your federal gross is a bit lower since there are certain allowances that are not taxed federally but are by states.  Then you get different deductions on your federal tax form from state and federal, so NO, your federal taxable income will not match your state taxable income. For example, you get a $5350 (or therabouts) deduction for a single person, plus a $3400 deduction for federal taxes.  If you make $10,000 then this brings your taxable income to only $1250 so you pay tax on that amount.  (These are very general terms!)  For your state you might have a $2000 deduction as a single person, so your net taxable income on a gross $10,000 would be $8000 for your state.  You have to complete 2 forms- 1 for federal and 1 for state, mailed (or via computer) to different addresses.