June 22, 2000 -- Because the federal income tax is the biggest and usually the first tax we see listed on our pay stubs, we naturally tend to focus on it.

But state government takes a bite out of our spending money, too. Bankrate will help you stay on top of what your localities are collecting -- income, sales, personal property or investment taxes, or often a combination of all.

Here's a look at some recent tax actions across the nation.

Michigan education savings offer tax break
LANSING -- Michigan residents now can contribute to expanded savings accounts for a child's higher education. And as a bonus, money put into the accounts is deductible from state income tax.

The Michigan Education Savings Program -- a collection of educational financing bills -- was signed into law June 16. The savings account component is available to all state residents, regardless of income, and the money may be used to pay for qualified expenses at any college (four-year or community), university or technical school in the nation.

Individuals may open one or more education savings accounts for a designated beneficiary. Students also may start an account naming themselves as the beneficiary. Total contributions made on behalf of any one beneficiary may not exceed $125,000 and improper withdrawals will be subject to a 10 percent penalty.

Contributions up to $5,000 per year for single filers ($10,000 for joint returns) will be fully deductible from state income tax. In addition, interest earned on tax-deductible contributions to education savings accounts and distributions from these accounts also will be fully state-tax deductible.

On the federal level, contributions will grow tax deferred, according to Gov. John Engler's office, with taxes due on earnings only when money is withdrawn by the student, who usually has a lower tax rate.

Angry Tennesseans block income tax
NASHVILLE -- Tennessee lawmakers were forced to drop plans this summer to institute a state income tax after a revolt by angry voters.

Gov. Don Sundquist last year broached the issue, but backed down. Legislators reconsidered the tax earlier this year, but changed their minds. Then this spring, lawmakers tried again with a scaled-back income tax targeting high-income taxpayers.

But the fact that the 5 percent tax would have been imposed only on an estimated 42,000 Tennessee residents who earn $100,000 or more ($200,000 for joint filers) didn't stop protesters -- many who make much less -- from deluging the state capital. One representative noted that the city block housing the state legislature was filled with "just as many as could drive around it, bumper to bumper." Inside was no safer for lawmakers, where the gallery was packed with angry -- and vocal -- voters, "hooting and hollering."

Anti-income tax leaders, spurred in part by talk radio programs, said the tax plan had to go because there was no assurance that the $100,000 threshold wouldn't eventually be lowered to include all Tennessee residents. House leaders and the governor tried, but failed, to find a way provide a constitutional guarantee to fix the tax at the 5 percent level for high earners.

Tennessee residents now pay a 6 percent sales tax, but there are numerous exemptions to the tax. Lawmakers say they must find a way to plug a $365 million hole in the state's budget, caused in part by the state's Medicare program. If a way to fill that gap and pass a budget by June 30 is not found, some state officials say a government shutdown is possible.