NCPA - National Center for Policy Analysis

States Differ Greatly On Tax Policies Toward Poor

March 5, 1999

While federal income taxes on low-income Americans have been on the decline, some states levy no taxes on those at or below the poverty line and even give them a refundable credit, while others levy taxes of at least a few hundred dollars a year. This conclusion emerged from a study undertaken by the Center for Budget and Policy Priorities.

  • Working families with incomes below the poverty line are taxed in 19 states.
  • Eight states do not tax such families and give them a refundable credit.
  • Fourteen states levy no taxes and give no refundable credits.
  • At the extremes are Kentucky, where a family of four with a poverty-line income of $16,655 would have a state income tax bill of $550 for 1998, and Minnesota, where the same family would get a payment of $1,127.

Other states with the highest taxes on such a family are Hawaii, $519; Alabama, $408; Indiana, $396; Illinois, $344; and Virginia, $293.

After Minnesota, states with the highest payments are Vermont, $708, New York, $499; Wisconsin, $396; Massachusetts, $283; and Kansas, $224.

Source: Albert B. Crenshaw, "Va., 18 Other States Still Tax Poor Families," Washington Post, March 4, 1999.


Browse more articles on Government Issues