2025 State Income Tax Rates and Brackets

Louisiana also repealed its graduated income tax in favor of a flat rate. The new income tax rate starting with tax year 2025 is 3%. States with flat tax systems apply the same tax rate to all taxable income, regardless of how much a person earns. While this approach is simpler to administer and calculate, it doesn’t account for differences in income levels.

State Individual Income Tax Rates and Brackets, 2021

• If you live and work in the same state, you probably need to file only one state return each year.
• Residents of Virginia, for example, generally have until May 1 to file their state returns.
• As is the case for federal returns, the amount you’ll pay to your state is also a function of your filing status, whether you have dependents, and whether you qualify for tax deductions and credits.
• 531, enacted in April 2022, Mississippi continues reducing its flat individual income tax rate.
• Forty-two states levy individual income taxes.
• Income over $1,000,000 is subject to a 9% rate.
• However, it’s important to keep in mind that not everyone pays the highest tax rate and that state income taxes don’t make up the whole picture when looking at the overall tax burden.

521 was enacted, retroactively reducing Idaho’s individual and corporate income tax rates from 5.8 to 5.695 percent as of January 1, 2024. 1015, enacted in April 2024, the flat individual income tax rate for 2024 decreased from 5.49 percent to 5.39 percent. Although the bill allowed for an accelerated schedule of future individual income tax rate reductions, the revenue conditions were not met for 2025, so the rate remains at 5.39 percent this year. State income tax income statement rates receive relatively little attention compared with federal income taxes, but they can still put a large dent in your wallet. How large depends on the amount you earn, as well as where you live and work.

Payroll Calendar Templates

This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Use these handy biweekly, semi-monthly, and monthly payroll calendar templates to stay on top of pay periods and pay dates in 2026. The top rate in Nebraska reduces from 5.84% to 5.2%. The reduction is part of Legislative Bill 754, which will gradually reduce the top rate to 3.99% by 2027.

How Paycor Helps You Manage Income Taxes

• Some states tie their standard deductions and personal exemptions to the federal tax code, while others set their own or offer none at all.
• This complicates tax compliance for businesses that operate in multiple states.
• The passing of Iowa Senate File 2442 replaced Iowa’s previous graduated income tax rate with a flat rate of 3.8% beginning with the 2025 tax year.
• 1001, enacted in May 2023, Indiana accelerated its previously enacted tax rate reductions, lowering the individual income tax rate from 3.05 in 2024 to 3.00 percent in 2025.
• 1015, enacted in April 2024, the flat individual income tax rate for 2024 decreased from 5.49 percent to 5.39 percent.
• 259, enacted in September 2023, North Carolina accelerated the reduction of its flat individual income tax rate.

The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the Bookkeeping for Startups largest source at all. 531, enacted in April 2022, Mississippi continues reducing its flat individual income tax rate. Effective January 1, 2025, the tax rate goes down from 4.7 percent to 4.4 percent (applied on taxable income exceeding $10,000).

State Individual Income Tax Rates and Brackets, 2023

The flat rate tax in North Carolina reduces from 4.5% to 4.25% in 2025. This is part of a phased reduction plan to ultimately bring the rate to 3.99%. While living in a no-income-tax state allows residents to keep more of their paycheck, it’s important us state income tax rates to consider the trade-offs. Essential services like education and infrastructure may receive less funding, and other taxes or costs of living may be higher to compensate.