USA Tax Terms Glossary
Essential tax terms and state tax information for recruiters and job seekers.
Tax Terms
Common tax terms used in recruitment and employment
W-2 Employee
Traditional employment relationship where the employer withholds income taxes, Social Security, and Medicare from wages.
•Employer pays half of Social Security and Medicare taxes
•Eligible for unemployment benefits
•Employer provides benefits (health insurance, retirement plans, etc.)
•Limited tax deductions for work-related expenses
Recruitment Impact
1099 Contractor
Independent contractor who receives payment for services without tax withholding.
•Responsible for all Social Security and Medicare taxes (self-employment tax)
•Not eligible for unemployment benefits
•No employer-provided benefits
•Can deduct business expenses on Schedule C
•Must pay quarterly estimated taxes
Recruitment Impact
C2C (Corp-to-Corp)
Business-to-business relationship where a contractor's corporation provides services to a client corporation.
•Requires forming a legal business entity (LLC, S-Corp, C-Corp)
•More tax deduction opportunities
•Can potentially reduce self-employment taxes with S-Corp
•More administrative responsibilities (business filings, separate accounting)
•Can hire employees and offer benefits through your corporation
Recruitment Impact
State Income Tax Rates
Highest and lowest state income tax rates (2023)
Highest State Income Tax
1.California
13.3%
2.Hawaii
11%
3.New York
10.9%
4.New Jersey
10.75%
5.Oregon
9.9%
6.Minnesota
9.85%
7.Vermont
8.75%
8.Iowa
8.53%
9.Wisconsin
7.65%
10.Maine
7.15%
Lowest State Income Tax
1.North Dakota
2.9%
2.Pennsylvania
3.07%
3.Indiana
3.23%
4.Michigan
4.25%
5.Arizona
4.5%
6.Colorado
4.55%
7.Utah
4.95%
8.New Hampshire
5%
9.Massachusetts
5%
10.Kentucky
5%
States with No Income Tax
These states do not impose income tax on residents, making them attractive for high-income professionals
Florida
Texas
Washington
Nevada
Wyoming
South Dakota
Alaska
Tennessee