Several state personal income tax laws allow taxpayers to deduct certain amounts of money from their net income according to filing status: single, heads of families, and individuals with dependents. And a few states permit the taxpayer to take the personal exemption in the form of a credit against the tax.
While there are some limitations, residents of states with income taxes are usually permitted to take a credit for taxes paid on income paid to another state. The tax must arise from personal services or business carried on in the other state. In terms of income earned in the state, nonresidents are often given a credit for taxes paid to their state of residence.