of business entities are not subject to tax. These include many types of formation or reorganization. Credits A wide variety of tax credits may reduce income tax at the federal and state levels. Some credits are available only to individuals, such as the child tax credit for each dependent child, American Opportunity Tax Credit for education expenses, or the Earned Income Tax Credit for low income wage earners. Some credits, such as the Work Opportunity Tax Credit, are available to businesses, including various special industry incentives. A few credits, such as the foreign tax credit, are available to all types of taxpayers. Payment or withholding of taxes The United States federal and state income tax systems are self-assessment systems. Taxpayers must declare and pay tax without assessment by the taxing authority. Quarterly payments of tax estimated to be due are required to the extent taxes are not paid through withholdings. The second and fourth "quarters" are not a quarter of a year in length. The second "quarter" is two months (April and May) and the fourth is four months (September to December). Estimated taxes used to be paid based on a calendar quarter, but in the 60's the October due date was moved back to September to pull the third quarter cash receipts into the previous federal budget year which begins on Oct 1 every year, allowing the federal government to begin the year with a current influx of cash. Employers must withhold income tax, as well as Social Security and Medicare taxes, from wages. Amounts to be withheld are computed by employers based on representations of tax status by employees on Form W-4, with limited government review. State variations Forty-three states and many localities in the U.S. impose an income tax on individuals. Forty-seven states and many localities impose a tax on the income of corporations. Tax rates vary by state and locality, and may be fixed or graduated. Most rates are the same for all types of income. State and local income taxes are imposed in addition to federal income tax. State income tax is allowed as a deduction in computing federal income, but is capped at $10,000 per household since the passage of the 2017 tax law. Prior to the change, the average deduction exceeded $10,000 in most of the Midwest, most of the Northeast, as well as California and Oregon. State and local taxable income is