Federal vs. State
PaisaTax currently supports federal tax preparation only. State tax support is planned for a future release.
How State Taxes Work
Most states levy an income tax on top of your federal tax. State taxes typically start with your federal AGI and then apply state-specific adjustments, deductions, and tax rates.
State tax rates vary widely — from 0% (no income tax) to over 13% (California's top rate).
States with No Income Tax
Nine states do not tax earned income:
- Alaska
- Florida
- Nevada
- New Hampshire (dividends and interest only, phasing out)
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
If you live in one of these states, you only owe federal taxes on your income.
What State Taxes Affect
SALT deduction: State income taxes paid are deductible on Schedule A (itemized deductions), but capped at $10,000 combined with local and property taxes.
Filing requirements: You generally must file a state return in (1) the state where you live and (2) any state where you earned income. This can mean filing multiple state returns if you work across state lines.
Coming Soon
PaisaTax will add state tax support in a future release. When available, the state module will:
- Import federal AGI and make state-specific adjustments
- Apply the correct state brackets and credits
- Generate the state return for filing
Info
For now, use your state's tax authority website or a state-specific tool to file your state return. Your PaisaTax federal return provides the AGI and other figures you'll need.