2024 Income Tax Reductions in American States Amid Inflation Challenges

In 2024, Americans in various states will see a reduction in their income taxes, providing a financial respite amid ongoing inflation challenges. This trend, identified by the Tax Foundation, a nonpartisan organization advocating for lower taxes, is predominantly occurring in states with Republican leadership.

State-Specific Tax Reductions

1. Arkansas: The top individual income tax rate decreased from 4.9% to 4.4% in January, expediting tax reductions initially planned for 2025.
2. Connecticut: The state lowered its 3% individual income tax bracket to 2% and its 5% bracket to 4.5%. However, these reductions exclude individuals earning over $150,000 and married couples earning over $300,000.
3. Georgia: Adopting a flat tax approach, Georgia will replace its six individual income tax rates with a single rate of 5.49%.
4. Indiana: Accelerating its tax rate cuts, Indiana’s individual income tax rate will drop from 3.15% to 3.05% in 2024.
5. Iowa: Working towards a flat tax rate of 3.9% by 2026, Iowa will reduce its top marginal tax rate to 5.7% in 2024.
6. Mississippi: The state set a single tax rate of 4.7% for incomes exceeding $10,000, a reduction from the previous 5%. Further reductions to 4.4% in 2025 and 4% in 2026 are planned.
7. Montana: After consolidating seven tax brackets into two, Montana’s top marginal rate will decrease to 5.9%, and the lower rate to 4.7% in 2024.
8. Nebraska: Nebraska’s top marginal tax rate will drop from 7.25% to 5.84% in 2024 for incomes over $100,000, with a goal of reaching 3.99% by 2027.
9. New Hampshire: Differing from income tax reductions, New Hampshire is phasing out its interest and dividends income tax, which will lower to 3% in 2024 and be eliminated by 2025.
10. North Carolina: The state’s flat income tax rate will decrease to 4.5% in 2024, down from 4.75%.
11. Ohio: Ohio consolidated its top two marginal tax rates into one, setting it at 3.5% for 2024.
12. South Carolina: The top individual income tax rate will be reduced from 6.5% to 6.4% in 2024, with further plans to lower it to 6%.

These tax reductions reflect a significant shift in fiscal policies across these states, aimed at alleviating the financial burden on residents and potentially stimulating economic growth.