(Fox Business) - A number of states are lowering income taxes this year, putting more money into many Americans' pockets as they continue to grapple with stubborn inflation.
At least 12 states, a majority led by Republicans, will reduce taxes for residents in some form this year, according to the Tax Foundation, a nonpartisan group that lobbies for lower taxes.
Here is a closer look at where state taxes are being reduced.
At the start of January, the top individual income tax rate in Arkansas fell to 4.4%, down from 4.9% the previous year.
The change accelerates rate reductions that originally were scheduled to begin in the 2025 tax year.
Connecticut will deliver some relief to taxpayers this year, cutting its 3% individual income tax bracket to 2%, and reducing its 5% bracket to 4.5%. However, the relief does not apply to individuals earning $150,000 or more, or married couples earning $300,000 or more.
All other rates remain unchanged, including the top marginal rate.
Georgia will join several states that have either adopted or are considering a flat tax rate. The Peach State will eliminate its six individual income tax rates in favor of a flat tax rate of 5.49% under legislation signed by Republican Gov. Brian Kemp in 2022.
Indiana will accelerate its previously enacted tax rate cuts in 2024, trimming the individual income tax rate from 3.15% to 3.05%.
Iowa is slowly moving toward a planned flat tax rate of 3.9%, which it intends to hit in 2026, as part of a $1.9 billion tax cut signed by Republican Gov. Kim Reynolds in 2022.
In 2024, it will reduce the top marginal tax rate to 5.7%
Mississippi residents with income exceeding $10,000 will pay a single tax rate of 4.7% this year, down from the initial rate of 5% that was established in 2023, according to the Tax Foundation.
The tax rate will eventually drop to 4.4% in 2025 and 4% in 2026.
Montana approved a major tax overhaul in 2021, combining its seven tax brackets into two. Beginning in 2024, the top marginal rate for Montana residents will fall to 5.9% in 2024, down from 6.75% the previous year. The lower rate will drop to 4.7% for the 2024 filing year.
The higher rate will apply to income above $20,500 for single taxpayers and $41,000 for married couples filing jointly.
Nebraska will reduce its top marginal tax rate from 7.25% to 5.84% in 2024 for all income above $100,000.
The state is working to reduce the top rate to 3.99% by 2027.
Unlike the other states which are reducing income taxes, New Hampshire is phasing out a tax on interest and dividends income.
The tax rate – which will be lowered to 3% in 2024, down from 4% the previous year – is set to be eliminated in 2025.
The flat income tax rate in North Carolina will fall to 4.5% in 2024, down from 4.75% the previous year.
In legislation passed last year, Ohio consolidated the top two marginal tax rates for individual income into one and set the rate at 3.5% in 2024.
South Carolina will reduce its top individual income tax rate from 6.5% to 6.4% in 2024. The Palmetto State aims to reduce the rate further to 6%.
By Megan Henney
