Most states levy an income tax on their residents that is in addition to the federal income tax. Laws vary from state to state but in most states the state income tax is a tax on the annual earnings of individuals, corporations, trusts, limited liability companies, and other legal entities.
There are nine states that do not have a state income tax—including Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. But New Hampshire levies a tax on capital gains and Washington state recently enacted a tax on extraordinary profits from the sale of financial assets over $250,000.
Hawaii does levy a state income tax on its residents, which is in addition to the federal income tax. The state income tax in Hawaii applies to the annual earnings of individuals, corporations, trusts, limited liability companies, and other legal entities. The tax rates are progressive, meaning that the rate increases as the income level rises. Hawaii's individual income tax rates range from 1.4% to 11%, depending on the taxpayer's income bracket. For corporations, the rates range from 4.4% to 6.4%. It's important for residents and entities in Hawaii to be aware of their tax obligations under state law and to file their state income tax returns annually, in addition to their federal returns.