TAXES - INCOME;

OLR Research Report


February 13, 2003

 

2003-R-0165

"PIGGYBACK" INCOME TAXES

By: Judith Lohman, Chief Analyst

You asked for information about recent income tax law changes in the last three states with state income taxes that “piggyback” on the federal income tax. The states are North Dakota, Rhode Island, and Vermont.

SUMMARY

NORTH DAKOTA

Table 1: 2002 North Dakota Income Tax – Simplified Method

TAX RATE

NORTH DAKOTA TAXABLE INCOME

(Federal taxable income with adjustments)

Single

Married Filing Jointly

Married Filing Separately

Head of Household

From

To

From

To

From

To

From

To

2. 1%

$ 1

$ 27,950

$ 1

$ 46,700

$ 1

$ 23,350

$ 1

$ 37,450

3. 92%

27,951

67,700

46,701

112,850

23,351

56,425

37,451

96,700

4. 34%

67,700

141,250

112,851

171,950

56,426

85,975

96,701

156,600

5. 04%

141,251

307,050

171,951

307,050

85,976

153,525

156,601

307,050

5. 54%

Over $ 307,050

Over $ 307,050

Over $ 153,525

Over $ 307,050

(North Dakota Century Code 57-38-30. 3)

RHODE ISLAND

Before 2001, Rhode Island’s income tax rate for the 2002 tax year was set at 25% of federal tax liability. In 2001, the state legislature changed Rhode Island taxable income to federal taxable income, with certain adjustments. In addition, it set tax rates at a percentage of federal income tax rates in effect immediately prior to enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001. The tax rate for 2002 is 25% of those federal tax rates. The decoupling law requires the Rhode Island tax administrator to adjust the federal rate schedules annually for inflation. (RI Code, 44-30-2. 6)

VERMONT

Prior to changes enacted in 2002, Vermont’s income tax rate was 24% of federal tax liability. Vermont’s new income tax, which applies for tax years starting on or after January 1, 2002, is based on federal taxable income with certain adjustments. Tax rates for individual taxpayers are shown in Table 2.

Table 2: Vermont Income Tax

TAX RATE

VERMONT TAXABLE INCOME

(Federal Taxable Income with adjustments)

Married Filing Jointly

Head

of Household

Single

Married Filing Separately

From

To

From

To

From

To

From

To

3. 6%

$ 1

$ 46,700

$ 1

$ 37,450

$ 1

$ 27,950

$ 1

$ 23,350

7. 2

46,701

112,850

37,451

96,700

27,951

67,700

23,351

56,425

8. 5

112,851

171,950

96,701

156,600

67,701

141,250

56,426

85,975

9. 0

171,951

307,050

156,701

307,050

141,251

307,050

85,976

153,525

9. 5

Over $ 307,050

Over $ 307,050

Over $ 307,050

Over $ 153,525

(Vermont Stats Ann. , 32-5822)

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