Why is my federal taxable income lower than my state taxable income

[SweetieJean]

Federal and state tax laws are different.  See answer below.

[Vanessa · Accepted solution]

There could be a few reasons. 

Generally, your federal taxable income reported in box 1 does not include things like your share of health insurance paid, 401K deductions, HSA deductions or other federally nontaxable items.  Many states do not give a tax break for these items, therefore your state taxable income is higher than your federal.

If that is not your situation, it could be that you are in a simple tax state similar to Pennsylvania.  Most people in PA do not get any deductions from their income to arrive at taxable income.  They simply get taxed on what they earned.

Whereas for federal, everyone who is not claimed as a dependent by someone else, gets a minimum of a $12,000 standard deduction from their federal Adjusted Gross Income to arrive at the federal taxable income.  So example

If you earned $30,000 as a resident of PA your PA taxable income would be $30,000.  Your federal taxable income would be $18,000 (30,000-12,000)  Your federal could be even lower (as low as $0) if you filed as head of household, married filing jointly,  itemized your deductions and/or had various other deductions.