Curtis just recieved a raise at work increasing his salary by $8,500. he knows that an increase in salary will increase the amount of federal income taxes withheld from his paycheck. which of the following statement best describes the effect his raise will have on state income tax withholdings? a. state income tax is unrelated to federal, he will see no change in his state withholding. b. since he is having more withheld for federal, he will have less withheld for state so that he pays the same amount in the end. c. state income tax is usually a set percentage of federal income tax. with an increase in federal he will see an increase in state withholding. d. since he is making more money, the state government will take advantage of his raise and charge him more income tax. his state withholding will increase.

Federal income tax rules and state income tax rules differ from each other to determine the taxable income of people. Their margins vary widely. The state tax also increases when federal tax increase. So, option C is the right answer.

c. State income tax is usually a set percentage of federal income tax. With an increase in federal he will see an increase in state withholding.

The option (c) is correct.

The effect of raise on the state income tax is usually a set percentage of federal income tax. With an increase in federal, he will see an increase in the state withholding.

Further Explanation:

The relation between state income tax and federal income tax:

State income tax is an additional percentage of tax on the income of an individual other than the federal tax. State tax is a percentage of federal income tax. If the federal tax increases, the state income tax will also increase. State income tax differs from state to state. The federal income tax of the United States does not change; it changes with the change in the income of an individual.

Both taxes are calculated on a progressive basis. It means the higher tax would be imposed in case of higher income.  

Justification for the correct and incorrect

a.

State Income Tax is unrelated to federal; he will see no changes in his state withholdings:

It is incorrect to say that he will not see any changes in his state withholdings because the state tax is always a percentage of what an individual pays to the federal government. So, his state withholdings will definitely increase with an increase in income.

b.

Since he is having more withheld for federal, he will have less withheld for a state so that he pays the same amount in the end:

The income tax payable by an individual is not the fixed amount, but it is a certain percentage of what the individual earns. Also, the state tax is a percentage of federal tax, so there is no point of settling the two amounts of taxes equal to a particular amount an individual has to pay.

c.

State income tax is usually a set percentage of federal income tax. With an increase in federal he will see an increase in the state withholding:

The state income tax is a percentage of federal income tax, and it differs from state to state and changes with the change of income tax payable to the federal government.

d.

Since he is making more money, the state government will take advantage of his raise and charge him more income tax. His state withholding will increase:

The state government does not take advantage of raise in the income of an individual. Although it is correct that the state withholding will increase but not this way. The state withholding is only going to increase when there is an increase in his federal withholdings. Since in this case the taxable income is increasing, we can say that both the federal as well as state withholdings of the individual will increase.

Learn more:

1.Learn more about the tax on the profit from selling the fixed assets

2.Learn more about the personal tax

3.Learn more about the role of money

Answer details:

Grade: Senior School

Subject: Taxation

Chapter: Income Tax

Keywords: Working salary, increase in salary, income tax, federal tax, state tax, difference between, federal tax, and state tax, state tax, as a percentage, of federal tax, increase in income, results in, increase, income tax payable.

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