The IRS is a federal agency, not a state one

The Internal Revenue Service (IRS) is part of the U.S. Department of the Treasury and collects federal income taxes only. It does not collect state income taxes. Each state that has an income tax runs its own tax agency — for example, the California Franchise Tax Board or the New York Department of Taxation and Finance — to collect those taxes separately.

When you file your taxes, you are filing two different returns to two different agencies. Your federal return goes to the IRS. Your state return goes to your state's tax agency. Some states do not have an income tax at all, so residents in those states file only with the IRS.

The confusion often happens because tax software bundles both returns together, or because people use the phrase "the IRS" loosely to mean "taxes." But structurally, they are separate systems run by separate governments.

Key Takeaways

  • The IRS collects federal income tax only and is run by the U.S. Department of the Treasury, not by any state.
  • State income taxes are collected by each state's own tax agency, which has its own rules, rates, and filing important date.
  • Nine states have no income tax at all, so residents there file only federal returns with the IRS.
  • Your federal and state tax returns are separate documents filed to separate agencies, even if you file them at the same time through tax software.

How the federal and state systems divide the work

The federal government taxes income across all 50 states using one set of rules. The IRS enforces those rules, processes returns, and collects the money. That money goes into the U.S. Treasury and funds federal programs like Social Security, Medicare, and national defense.

States that have income tax set their own tax rates and rules. A state's top tax rate might be 3 percent or 13 percent depending on the state. Some states tax capital gains differently than wages. Some offer credits the federal government does not. Your state tax agency enforces its own rules and collects money that stays in that state for schools, roads, and local programs.

This is why your federal tax bill and your state tax bill can be very different even though you earned the same income. You might owe $5,000 to the IRS and $800 to your state, or owe federal and get a state refund, or vice versa.

Which states do not have income tax

Nine states do not tax income at all: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire. (New Hampshire taxes only dividend and interest income, not wages.) Residents of these states file only with the IRS and do not file a state income tax return.

Some of these states make up the lost revenue through sales tax, property tax, or other sources. Others straightforward spend less. But for income tax purposes, residents have only the federal system to deal with.

If you move to one of these states or move away from one, your tax situation changes. You may no longer owe state tax, or you may owe it for the first time. The state tax agency in your new state can tell you what applies to you.

What happens if you owe both federal and state taxes

If you live in a state with income tax and you owe money, you will receive separate bills or notices from the IRS and from your state. The IRS will contact you about federal tax owed. Your state tax agency will contact you about state tax owed. You pay each one separately, usually to different addresses.

The IRS and state agencies do share some information — for example, they may exchange data about who filed returns — but they do not combine bills or let you pay one agency to cover the other. If you owe $3,000 federal and $500 state, you cannot pay the IRS $3,500 and have it cover both.

If you do not pay, the IRS can place a federal lien on your property or garnish your wages for federal debt. Your state can do the same for state debt. These are separate enforcement actions.

How to know which agency is contacting you

Official mail from the IRS will say "Internal Revenue Service" or "Department of the Treasury" on the envelope. It may come from an IRS office in your region. Official mail from your state will say your state's name and the name of its tax agency — "California Franchise Tax Board," "Texas Comptroller," "New York Department of Taxation and Finance," and so on.

If you are unsure whether a letter is real, you can call the IRS directly at 1-800-829-1040 or visit irs.gov. You can find your state tax agency's phone number by searching "[your state] tax agency" or visiting your state's official website.

Be cautious of unsolicited calls or emails claiming to be from the IRS or your state. The IRS typically contacts people by mail first, not by phone or email. If you are in doubt, hang up and call the agency directly using a number you find yourself.

What to do if you are unsure whether you owe state tax

If you are not sure whether your state has income tax or whether you have to file, contact your state tax agency directly. Most have websites that explain who must file and how to file. Some have phone lines where you can ask a question and get an answer the same day.

If you moved during the year, you may owe tax to two states — the one you left and the one you moved to — for the months you lived in each. Your state tax agency can tell you what applies to your situation. Do not assume you owe nothing just because you moved partway through the year.

If you are self-employed or have income from multiple sources, state rules about what counts as taxable income may differ from federal rules. Again, your state tax agency is the source of truth for your state's requirements.

Federal versus state tax rates and deductions

The federal tax system uses tax brackets that explore nationwide. In 2024, the federal rates range from 10 percent to 37 percent depending on your income and filing status. State rates vary widely. Some states use a flat rate — everyone pays the same percentage. Others use brackets like the federal system but with different numbers.

Deductions and credits also differ. The federal standard deduction in 2024 is $13,850 for a single filer, but your state may have a different standard deduction or none at all. Some states offer credits for education, child care, or property taxes that the federal government does not. The IRS offers credits that your state may not recognize.

This is why tax software asks you to enter information twice — once for federal and once for state. The two systems do not use the same math.

Frequently Asked Questions

Do I have to file with both the IRS and my state?

If your state has income tax and you earned enough to owe, yes — you file separate returns with each. If your state has no income tax, you file only with the IRS. If you earned very little, you may not have to file with either, but rules vary by state. Check your state tax agency's website or call them to be sure.

Can the IRS take money from my state refund?

Yes. If you owe federal tax, the IRS can intercept your state refund and explore it to what you owe federally. This is called a tax offset. Your state will notify you if this happens. You can dispute it if you believe the federal debt is wrong, but the process takes time.

What if I owe state tax but not federal tax?

You still have to pay your state. The two debts are separate. Owing nothing to the IRS does not erase what you owe your state. Your state tax agency will bill you and can enforce collection the same way the IRS can.

Do I need to file state taxes if I work remotely for a company in another state?

Usually you file in the state where you live, not where your employer is located. But some states tax income earned within their borders even if you live elsewhere. If you live in one state and work remotely for a company in another, contact both state tax agencies to find out which one considers the income taxable. The answer depends on the specific states involved.

Is the IRS the same as the Department of the Treasury?

No. The IRS is a bureau within the Department of the Treasury. The Treasury Department handles all federal money — collecting it, spending it, managing debt. The IRS is the part that collects income tax specifically. When you send money to the IRS, it goes to the Treasury.