This year, many states are cutting income taxes, which will put more money in the palms of many Americans who are still struggling with persistent inflation.
The Tax Foundation, a neutral organization that advocates for reduced taxes, reports that at least 12 states—the majority of which are headed by Republicans—will slash resident taxes in some capacity this year.
Here’s a closer look at the areas where state taxes are being lowered.
The Arkansas state
The highest individual income tax rate in Arkansas decreased from 4.9% to 4.4% at the beginning of January. Rate cuts that were initially planned to start in the 2025 tax year are now accelerated by the change.
New England
This year, Connecticut is going to provide some assistance to taxpayers by lowering its individual income tax brackets from 5% to 4.5% and from 3% to 2%. However, people making $150,000 or more alone or married couples making $300,000 or more are not eligible for the assistance. Except for the top marginal rate, all other rates stay the same.
Georgia-
Georgia will follow many states that have implemented or are debating a flat tax rate. Under legislation approved by Republican Governor Brian Kemp in 2022, the Peach State will do away with its six individual income tax rates in favor of a flat tax rate of 5.49%.
Indiana, USA
Indiana will reduce the individual income tax rate from 3.15% to 3.05% in 2024 as part of an expedited implementation of previously implemented tax rate reductions.
Midwest
As part of a $1.9 billion tax decrease that Republican Governor Kim Reynolds signed into law in 2022, Iowa is gradually preparing to reach a flat tax rate of 3.9% in 2026.
The top marginal tax rate will drop to 5.7% in 2024.
Southeastern Mississippi
The Tax Foundation reports that Mississippians who earn more than $10,000 would pay a single tax rate of 4.7% this year instead of the 5% starting rate that was instituted in 2023. Eventually, the tax rate will decrease to 4.4% in 2025 and 4% in 2026.
In Montana
In 2021, Montana adopted a significant tax reform that combined the state’s seven tax rates into two. The top marginal rate for Montanans will start to decline in 2024, from 6.75% to 5.9%. For the 2024 filing year, the reduced rate will decrease to 4.7%.
For individuals filing alone, the higher rate will be applied to income over $20,500; for married couples filing jointly, it will be applied to income over $41,000.
The Nebraska
In 2024, Nebraska will lower its highest marginal tax rate for any income over $100,000 from 7.25% to 5.84%. By 2027, the highest rate is expected to drop to 3.99% according to official efforts.
New England
In contrast to other states that have lowered their income taxes, New Hampshire is gradually eliminating its tax on interest and dividend income.
The tax rate is scheduled to be abolished in 2025 after being reduced from 4% in the previous year to 3% in 2024.
Carolina in North
In 2024, North Carolina’s flat income tax rate will drop from 4.75% to 4.5%.
Ohio-
Ohio combined the top two individual income marginal tax rates into one in legislation last year, setting the rate at 3.5% in 2024.
South Carolina
In 2024, South Carolina’s top individual income tax rate will drop from 6.5% to 6.4%. The goal of the Palmetto State is to lower the rate even more, to 6%.
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