AMERICANS in several states can expect to pay less in taxes this year.
The majority of the 11 states that lowered taxes this year are governed by mostly Republicans, a nonpartisan organization found.
“We are seeing the culmination of two years of substantial tax cutting across the country, in response to historically high revenues and a desire for states to remain competitive in a much more mobile environment,” said Jared Walczak, the vice president of state projects at the Tax Foundation, according to Fox Business.
However, keep in mind that some of those red states gave more targeted relief to higher earners.
The U.S. Sun has compiled a list of each state’s tax cuts and what you should expect gearing up for the tax season.
In Arizona, taxpayers will see a flat tax plan instead of the state’s historic graduated income tax scale.
The graduated scale started at 2.59 percent with a maximum tax of 4.5 percent for yearly incomes over $159,000.
However, now that the scale is gone, all taxpayers will pay the flat rate of 2.5 percent.
“This tax relief keeps Arizona competitive and preserves our reputation as a jobs magnet and generator of opportunity,” former Arizona Governor Doug Ducey said in a statement.
It’s expected to save state taxpayers $1.9billion in total next year.
However, much of this will help higher earners more than lower-income residents.
Up next is Arkansas, where the top individual income tax rate was cut down to 4.9 percent.
Previously, the percentage was higher at a maximum of 5.9 percent.
The tax reduction wasn’t planned until 2025 but the state opted to begin it early due to inflation concerns.
Idahoans can expect a flat individual income tax rate of 5.8 percent to go into effect this year.
Previously, the maximum rate was set at 6 percent.
Starting in 2023 and 2024, Indiana has lowered its flat individual income tax rate to 3.15 percent.
Its high previously was 3.25 percent, so Indiana residents will be leaving with more in their pockets.
There are also certain rules that could allow residents to get their tax rate down to 2.9 percent – but this requires additional criteria to be met.
Likewise, Iowa will be seeing its own lowered flat tax rate this year.
The previous 3.9 percent flat tax is being phased out over a period of four years.
If this affects you, you should go to the state government website to see when it could impact your taxes.
Because the change is occurring over a period of time, not all taxpayers will see the lower rate at the same time.
Retirement income and corporate taxes also saw a decrease from the $1.9billion cut approved by Governor Kim Reynolds.
“With this bill, Iowa is now the fourth lowest for individual income tax rates in the nation,” Reynolds said in a statement. “There’s never been a better time in Iowa for bold, sustainable tax reform.”
Kansas implemented a tax cut specifically related to grocery costs this year.
Starting January 1, the state’s food taxes have been lowered to 4 percent, down from 6.5 percent.
However, this is just the beginning of the state’s master plan to remove taxes on food entirely by 2025.
As of December, food prices were 10.4 percent higher than in 2021, leaving many American families struggling to feed their children.
Starting this year, Kentucky residents will see their individual income tax rate slashed to 4.5 percent, down from five percent.
However, the decrease came at the same time the state began to apply its sales tax more broadly.
Car rental, ride-sharing and taxi services are all now included under sales tax regulations.
There will also be a new six percent excise tax added on top of that.
In Missouri, residents can expect a cumulative $760million tax cut.
The measure was signed into law by Governor Mike Parson, who called it the largest tax cut in the state’s history.
Specifically, this means Missouri taxpayers will see a lowered tax rate of 4.95 percent in January, down from 5.3 percent before.
Additionally, the first $1,000 of taxpayer’s income is entirely exempt from taxes.
Also beginning this January, Mississippi decided to switch to a flat tax system, effectively ending a four percent tax on all taxable income between $5,000 and $10,000.
Instead, there will be a standard tax of five percent on all income beyond $10,000.
Plus, the state has plans to take its tax cut even lower, dropping to 4.7 percent in 2024, 4.4 percent in 2025 and 4 percent in 2026.
10. NEW YORK
Middle-class families will benefit especially from New York’s lowered tax rates this year.
Instead of waiting for 2025 to enact the reductions as originally planned, state officials implemented them now.
That means those who make between $13,900 and $80,650 will see their tax rate drop to 5.5 percent.
Individual filers making between $80,650 and $215,400 will see a lowered tax rate of six percent.
Last year, those levels had taxes of 5.85 and 6.25 percent.
11. NORTH CAROLINA
North Carolinians are also seeing a tax drop this year.
While the flat tax rate was 4.99 percent in 2022, this year is ushering in some changes.
Residents will now only be taxed 4.75 percent regardless of income level.
For more related stories, here are 11 states with their own child tax credit programs.
Plus, here are three steps to track your IRS refund.