Stateline Story

Report: States tax low-income families

  • February 22, 2006
  • By Stateline Staff
The state income-tax burden faced by poor families has declined in the past 15 years, but some low-income families still incurred substantial state income-tax bills in 2005, according to a Feb. 22 report by the Center on Budget and Policy Priorities , a Washington, D.C., group that focuses on policies affecting the poor.
  
The Center's state-by-state analysis , which does not account for cost-of-living differences, indicates that 19 states in 2005 taxed two-parent families of four who live in poverty, five fewer than in 1991.
 
Sixteen states are collecting income taxes from single parents with two children who live below the federal poverty line of $15,577.
Alabama has the lowest tax threshold of any state for single-parent families of three or two-parent families of four. Wage-earners in both types of families owe state income taxes if they make more than $4,600 a year, well below the federal poverty line. California has the highest threshold. Taxpayers in the Golden State don't owe state income taxes until their annual wages exceed $40,500 in the case of single parents with two children and $42,700 for two-parent households with two children.