State Tax vs. Federal Tax: Looking at taxes

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Difference between State Tax and Federal Tax

The subject of taxation can be quite a confusing one, and many people are unaware of the differences between state tax and federal tax. While it is true that both share a lot more similarities than differences, it would be a good idea to learn more about the distinctive characteristics of each in order to be better informed in the future. To that end, we present this basic state tax and federal tax comparison guide.

State Tax
Federal Tax


Both the state tax and the federal tax are results of the varying levels of government in the country. The federal government is of course in charge of maintaining authority over the entire United States, and it is this body that imposes federal tax requirements. These types of taxes are used for a wide variety of purposes, with most of them being related to concerns of a national scope.

As for the state tax, these are taxes imposed by the local government of a particular state. These governing bodies impose taxes that are typically used for purposes of local community building, development and services.

Where The Taxes Go

Federal taxes are commonly used to fund projects such as welfare, social security, and health care, in addition, to various other services of a local scope. While some would argue that the costs of such services would be more affordable if they were paid for by the individual, there is no question that federal taxes are beneficial to a considerable number of the local population when utilized in the proper manner.

State taxes on the other hand are used to develop and improve on various services on a national level. The funds for such taxes typically go to road improvement projects, preserving national borders, maintaining the prison system, and advancing education, among other goals of a local scope.

Tax Obligations

The state tax typically covers a wide array of taxes that are the personal concerns of each person. Keep in mind that some states may not impose income tax requirements, although they may require other types of taxes. Commonly covered in state tax are income tax, local sales taxes, vehicle tax, property tax, and many more.

As for the federal tax, they may also encompass individual income taxes, in addition tocorporate taxes, business taxes, social security, heavy vehicle taxes, and many more. There is a growing underground movement focused on the illegality of federal taxes being imposed on individual income as the wording related to establishment of federal tax was directed towards businesses.


State Tax

  • Imposed by the state government
  • Is comprised of individual income tax, sales taxes, vehicle taxes, and property taxes
  • Funds go to building local infrastructure such as roads and highways, borders, prisons, and education

Federal Tax

  • Imposed by the federal government
  • Is comprised of income tax, corporate taxes, employment taxes, social security, Medicare taxes, excise taxes, import taxes and many more
  • Funds welfare, social security, and Medicaid among others


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