This paper discusses some of the ways in which state tax systems affect low-income families. The focus is on the working poor. Why state tax policy matters for these families is explained, describing some general trends in state tax structure among the 50 states. Attention is then paid to details on personal income and sales taxes in a subset of 13 states that have been the focus of the Assessing the New Federalism program. These states represent a wide variety of income distributions and tax structures. The implications of these tax policies for different types of families are discussed in terms of their after-tax income levels and work incentives. The various policy options states have to increase tax relief for low-income families are outlined, as are the issues states must consider in evaluating these alternatives. There is great diversity in how states tax low-income families. Some states impose substantial tax burdens through income taxes and sales taxes, while others provide generous subsidies through earned income tax credits similar to the federal version. A few states provide refundable child care credits as well. (Contains 10 tables, 4 figures, 11 references, and 23 endnotes.) (SLD)