2024 State Income Tax Rates And Brackets

Changes, including nine states cutting individual income taxes (two of them implementing flat taxes), three states cutting corporate income taxes, and two states adopting new first-year expensing provisions. Iowa enacted comprehensive tax reforms in 2018, 2021, and 2022, and many of these reforms will continue phasing in over the coming years. Effective January 1, Iowa’s nine individual income tax rates were consolidated into four, and the top rate was decreased from 8.53 to 6 percent. Iowa’s graduated-rate tax structure is scheduled to shift to a flat taxAn income tax is referred to as a “flat tax” when all taxable income is subject to the same tax rate, regardless of income level or assets. (aa) Maine’s personal exemption begins to phase out for taxpayers with income exceeding $279,500 (single filers) or $335,400 (MFJ) (2021 inflation adjustments). The dependent personal exemption is structured as a tax credit and begins to phase out for taxpayers with income exceeding $200,000 (head of household) or $400,000 (married filing jointly).

Free Credit Data

• Several states adopted notable tax changes in 2024 that were retroactive to January 1, 2024, or otherwise made effective sometime during 2024, and which were adopted after, or otherwise not captured in our July 1 tax changes update.
• Further, changes outside of a state can impact tax burdens as well.
• When some share of the burden of a tax imposed in one state is borne by those who live elsewhere, this phenomenon is known as tax exporting.
• It’s likely that taxes take up more of a median income household’s income in New Hampshire because it doesn’t have a state income tax on wages graduated by income.
• HB 2, enacted in June 2023, accelerated the phaseout by two years, such that it takes effect in 2025 instead of 2027.

But one thing that makes Wyoming stand out is that they also don’t charge a corporate income tax. The Evergreen State gets its nickname from its lush forests — but it might also be an inside joke for all the money its residents save by not paying income tax. However, Washington residents will still have to pay a 6.5% sales tax. And when you live in the Aloha State, you’ll bookkeeping have to fork over a significant amount of money.

State Corporate Income Tax Rates and Brackets, 2018

Top marginal rates range from North Dakota’s 2.9 percent HVAC Bookkeeping to California’s 13.3 percent. Louisiana’s corporate income tax rate was cut to 5.5 percent as of January 1, 2025, via House Bill 2, adopted in special session in late 2024. Previously, the state had a three-bracket system with rates ranging from 3.5 percent to 7.5 percent. By temporary proviso, the FY 2025 budget lowered the state’s top marginal individual income tax rate for tax year 2024 by an additional 0.1 percentage points, to 6.2 percent, ahead of the statutorily scheduled reduction in 2025.

• Other than the states that do not levy an individual income tax, North Dakota has the lowest income tax rate in the nation.
• Colorado amended its property tax structure under SB , which caps the annual non-school district property tax revenue growth for non-home rule jurisdictions at 5.5 percent and also adjusts residential property tax assessment rates.
• Nevada, Ohio, Texas, and Washington impose gross receipts taxes instead of corporate income taxes.
• These and other tax changes taking effect on January 1 are detailed below.
• Uncle Sam takes his cut of our past year’s earnings every April, and since the tax code is so complicated, it’s hard for the average person to tell how they will be impacted.
• Additional triggers seek to eventually reduce the top rate to 4.5 percent.

Qualified Business Income Deduction (Sec. 199A)

For both individuals and corporations, state income tax rates taxable income differs from—and is less than—gross income. This is in addition to its top marginal rate of 9 percent, which kicks in at $100,000. Now dubbed the Corporate Transit Fee, the surtax applies to all net taxable income for such firms, not only the excess above $10 million. The surtax is not imposed on S corporations or public utilities. This replaces a 2018 surtax imposed on corporations with incomes above $1 million dollars, which expired at the end of 2023. These aren’t the only differences among the states when it comes to income taxes, either.

• New York has the highest state income tax burden out of any other state.
• 531, enacted in April 2022, Mississippi will continue reducing its flat individual income tax rate from 2024 to 2026.
• This tax shifting across state borders arises from several factors, including our movement across state lines during work and leisure time and the interconnectedness of the national economy.
• That’s right — residents only have to worry about property tax in the Granite State (although they do have some of the highest property tax rates in the country).
• The money collected from state income taxes is generally used to fund various state services and programs, such as education, infrastructure, public safety, and healthcare.
• Rhode Island HJR 7225 establishes a tax on all electronic nicotine delivery system (ENDS) products beginning January 1, 2025.

Property tax is a real estate ad-valorem tax levied by the jurisdiction in which the property is located and paid for by the property owner. Property taxes are recalculated annually and determined by multiplying the property tax rate by the property’s current market value. Unfortunately, every state has property taxes; however, some states have very low property tax rates. There may be higher costs elsewhere in these states, such as high sales taxes, to make up for the costs.

SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. Table 3 lists each state’s burden as a share of income, including rankings, for the three most recent calendar years available.

Table 3. 2024 Alternative Minimum Tax (AMT) Exemptions

Effective January 1, 2025, via SB 124, Montana’s corporate income tax apportionment formula will change from a three-factor formula consisting of payroll, property, and double-weighted receipts to a single-receipts factor apportionment formula. Additional changes to Illinois’ sales tax include changes made under SB 3362, enacted August 9, 2024. Alaska is by far the best state for all types of personal taxes. There is no income tax and there’s also no state-based sales tax (unlike other states).