Video: Types of State and Local Taxes

In this lesson, Nick Palazzolo, CPA, unpacks the intricacies of the various state and local taxes one might encounter, from property taxes, which can be a deductible on Schedule A, to the nuances of income and sales tax. He conveys how the calculation of state taxable income generally mirrors the federal approach but usually results in lower rates, albeit with some states like Florida lacking an income tax altogether. Nick dives into the workings of sales tax, often a familiar expense, and use tax, which aims to counteract cross-border shopping to avoid sales tax. Furthermore, he simplifies the concept of implicit taxes, such as those linked with municipal bond interest, demonstrating its significance for state and local governing bodies while also presenting the tax-exempt benefits for investors. Throughout the lesson, real-world examples and pertinent considerations for the CPA exam are provided, making a complex subject much more approachable.