Following the recent publication of AIRINC’s Global Tax Rates Maps, which provide a visual representation of effective tax rates around the world, we’re excited to focus on the United States in this installment of our blog series. In this series, we explored the diverse tax landscapes from Europe and the Middle East through Africa and APAC. Now, we turn our attention to the unique complexities of the US tax system.

The US Tax Rates Map Explained

The US tax Rates map provides a striking visual of how federal and state taxes interact. Middle-income earners in high-tax states like California and New York see significant portions of their income go to taxes, while no-tax states like Texas and Florida offer more take-home pay. For global mobility programs, the map is an essential tool for planning assignments and understanding regional tax burdens. Tax burdens generally in the United States are moderate compared to other developed countries – the effective tax rate for middle-income taxpayers ranges from 16% to 21% depending that varies by state.  

Why the US Tax Map Is Relevant for Mobility

  • State-by-State Variations: The Rates map clearly shows how state taxes can drastically alter an assignee’s financial situation. High-tax states may require additional allowances to maintain net income, with California and New York assessing the highest tax rates. In contrast, there are nine states that do not assess income tax on employment income, including Florida and Texas. In those no-tax states, revenues are generally funded through other means, including property taxes and sales taxes. 
  • Child Tax Credits and Deductions: The map emphasizes the importance of federal tax breaks for families, which can significantly reduce effective tax rates. This includes the child tax credit of $2,000 per child. Under the expanded standard deduction available to individuals under existing tax law, fewer and fewer taxpayers are claiming itemized deductions for mortgage interest, charitable contributions, and state and local taxes. According to the IRS, only about 10% of U.S. taxpayers still itemize since the standard deduction provides a lower tax liability. 
  • Social Security Implications: The capped social security system highlighted on the map affects middle-income earners more than higher earners as the FICA contribution of 6.2% is capped to wages up to $176,100. Mobility teams should consider these nuances when structuring compensation.

Upcoming Tax Changes in the US

  • TCJA Expiration and the Proposed “OBBB”: The Tax Cuts and Jobs Act (TCJA) is set to expire in 2025, and legislative efforts are underway to replace it with what’s currently being called the One Big Beautiful Bill (OBBB). The bill proposes to make many TCJA provisions permanent — including the 37% top marginal rate, expanded standard deductions, and the cap on SALT deductions. Moving expenses would remain non-deductible permanently under the OBBB and the enhanced child tax credit will generally remain in place. There are also proposed temporary incentives like deductions for tips and premium overtime pay, but these would only last four years and remain subject to FICA and Medicare. The evolving legislation introduces considerable uncertainty, and now is the time for companies to begin modeling potential tax scenarios and assessing how these changes could impact mobile employee compensation.
  • State-Level Tax Reforms: Several states have been implementing tax changes recently – generally tax cuts that are phased in gradually over several years – as improving state budgets allow for returning surplus revenues to taxpayers. For instance, some states are moving towards flat tax rates, while others are eliminating taxes on earned income altogether. As the implications of the federal budget funding are better understood, it is possible that states may need to revisit their budgets and tax revenues.  

Why Choose AIRINC?

AIRINC’s tax solutions are designed to address the multifaceted challenges of global mobility programs. Their combination of accurate data, strategic insights, and tailored advisory services empowers organizations to manage costs, ensure compliance, and maintain employee satisfaction. Whether dealing with tax equalization, planning assignments, or adapting to tax law changes, AIRINC delivers the expertise and tools to succeed in a globalized world.

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Contact Us

Are you looking for information on global tax rates around the world?

AIRINC’s International Tax Guide contains all of the information you need to support your assignment tax planning — including global tax rates, deductions, and employee/employer social security contributions.

Are you trying to move an employee from a lower- to a higher-tax rate location?

Use AIRINC’s Global Salary Comparison to understand the compensation you would need to offer to cover the difference and make the appropriate offer to your employee.

Join us for more on tax!

Starting this month, we’re teaming up with our friends at Global Tax Network (GTN) to bring you a three-part summer webinar series focused on the ins and outs of global mobility taxation. First up Mobility Tax 101 - Foundations of Global Mobility Taxation. Join us to learn the fundamentals of international mobility taxation - register here.