Q:

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.

Accepted Solution

A:
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.