Eight states will lower income tax rates in 2026. Do you live in that state?

The tax cuts come from some states, not the federal government. Eight states lowered their income tax rates starting Jan. 1, according to the Tax Foundation, a nonprofit think tank.

By putting more money in residents’ pockets, states hope to spur economic growth and attract more workers, businesses and investment, experts said.

The reductions “demonstrate that states continue to embrace reforms that increase competitiveness and foster continued economic growth for years to come,” the Tax Foundation said.

Which states are lowering their income tax rates?

The following states have lower tax rates:

• Indiana: The flat rate tax rate will decrease from 3% last year to 2.95%, and on January 1, 2027, the tax rate will be further reduced to 2.9%. Last year’s law called for the flat personal income tax rate to be reduced in 0.05% increments to a potential 2.55% in even-numbered years starting Jan. 1, 2030, provided income thresholds are met.
• kentucky:Flat rate reduced from 4% to 3.5%
• mississippi: As part of a planned multi-year gradual reduction in personal income tax, the final reduction will reduce the flat rate tax rate from 4.4% to 4%.
• montana: The maximum marginal interest rate decreases from 5.9% to 5.65% and further decreases to 5.4% in 2027. The floor rate of 4.7% will remain unchanged, but the range of this rate will be expanded.
• nebraska: The top interest rate will fall from 5.2% to 4.55% as part of an ongoing gradual reduction in the top rate to 3.99% by 2027.
• north carolina: The flat rate tax rate will decrease from 4.25% to 3.99%, the final rate reduction in a multi-year plan to reduce personal income tax rates.
• ohio: Income above $26,050 moves from 3.125% to a flat rate of 2.75%. Income below that threshold is not taxed.
• Oklahoma: The top tax rate will slide from 4.75% to 4.5%, and six individual income tax brackets will be reduced to three brackets.