This paper reports methodology underlying estimates for income year 1993 of income and poverty by state produced as part of the Census Bureau’s Small Area Income and Poverty Estimates (SAIPE) project. The paper has been prepared for a session devoted to this project, following an example set two years ago in which Siegel (1995) reviewed issues and strategies for county estimates, Fay and Train (1995) described methodology to produce direct variance estimates through replication for states and presented preliminary modeling results for per capita and median income at the state level, Otto and Bell (1995) described modeling of the direct variance estimates at the state level, and Cohen (1995) provided an initial reaction to these preliminary results.