Which statement is true regarding state and local income tax?

The correct statement about state and local income tax is that they are closely tied to ability-to-pay systems and are usually progressive. In many jurisdictions, income taxes are structured so that those who earn more pay a higher percentage of their income in taxes than those with lower incomes. This progressive tax structure helps to address income inequality by placing a larger tax burden on those who can more afford to pay, thus aligning with the principle of ability to pay.

The other options do not accurately describe state and local income taxes. For instance, while some states may implement flat taxes, many local and state income taxes vary in structure, which makes the statement about them being always flat incorrect. They do not apply exclusively to corporations, as individuals are also subject to these taxes. Lastly, state and local income taxes are not solely determined by federal guidelines; rather, each state has its own legislation and regulations governing taxation, which can differ significantly from federal standards.