Question

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

Explanation:

To determine the correct answer, we analyze each option:

• Option a: State and federal income taxes are related (state often ties to income, which federal tax is based on), so this is incorrect.
• Option b: There's no such inverse relationship between federal and state withholdings to keep total tax the same; both are based on income, so this is wrong.
• Option c: State income tax is often a percentage of federal taxable income or federal tax (or based on income, which federal tax is tied to). When federal withholding increases (due to higher income from a raise), state withholding, being a percentage of that (or tied to income), also increases. This makes sense.
• Option d: The state doesn't "take advantage"; state income tax is based on income (and tax brackets/rates), not a malicious act. The correct reason is the tax structure (percentage of federal - related income), so d is incorrect.

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.