Ready to consider taxes this year? With two weeks left to April 15, you’re tired of it now.
Tax rates vary by state, not Federal tax rate – But they always involve collecting a portion of your income from each salary. The percentage collected may depend on where you live and How much money do you make. The highest interest rate in the U.S. is 13.3% collected by California who charges more than $1 million a year, while states including Alaska, Florida and Nevada do not charge income tax at all.
Tax transactions this week
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But if you live in one of nine specific states, you may see a little increase in your paid salary after the legislator who lowers their income tax rates on January 1. Some of these cuts are small, while others are more important.
Keep reading for all the details about which states reduce their income tax rates and the amount. For more information on tax season, find out If you are eligible to claim a child tax credit Then watch What may be the future of credit and its value.
Which states have lowered their income tax rates?
As of January 1, the income tax reduction will take effect in the following nine states:
- Indiana
- Iowa
- Louisiana
- Mississippi
- Missouri
- Nebraska
- New Mexico
- North Carolina
- West Virginia
How much has the income tax rate dropped in these states?
Indiana One of the smallest cuts, its income tax rate dropped to 3% from 3.05% in 2025.
Iowa The unified income tax rate in 2025 fell to 3.8%, down from last year’s highest rate of 5.7%.
Louisiana It has also been transferred from the tiered income tax system to a uniform rate, with the unified interest rate this year at 3%, lower than the highest tax rate in 2024. The state’s largest income tier ($30,000 to $40,000) pays only $338 in income tax per year.
Mississippi Tax rates were cut at the least, down from 4.7% last year to 4.4%. Officials there also raised the goal of ultimately eliminating income taxes completely in the state.
Missouri It is another state with smaller cuts this year, falling from 4.8% to 4.7%.
Nebraska The income tax rate fell to 5.2%, down from 5.84% last year.
New Mexico Its tiered income tax rate will be retained, with two of its six income ranges falling in 2025. The income tax rate for less than $5,500 per year has dropped from 1.7% to 1.5%, while those rates between $16,500 and $33,500 have dropped from 4.7% to 4.3%.
North Carolina Interest rates fell to 4.5%, down from 4.75% last year. The state also plans to lower interest rates to 3.99% in 2026.
exist West Virginiaalthough specific interest rates have not been reported, residents can expect that residents will pay a 4% tax on total income tax in 2025. The state is another country where lawmakers have also proposed the goal of eventually eliminating income taxes altogether.
For more information, find out If you are eligible for the credit of a saver.
