These states just lowered income taxes: Find out if yours is one of them

Most states in the United States have a state income tax, which you pay in addition For federal income tax. But if you live in one of those few states, you may be lucky enough to see your tax rate decrease in 2025.

Tax rates vary from state to state, but they always include collecting a portion of your income from each paycheck. The percentage collected can vary greatly depending on where you live and How much do you earn?. The highest rate in the United States is 13.3% collected in California from those who earn more than $1 million annually, while states including Alaska, Florida and Nevada collect no income tax at all.

However, if you live in one of nine specific states, you’ll likely see your take-home pay increase slightly, after lawmakers in those states cut income tax rates effective January 1. Some of these reductions are minimal, while others are a bit more substantial.

Read on for all the details on which states have cut their income tax rates and by how much. To learn more about tax season, find out If you are eligible to claim the Child Tax Credit And we see What the future may hold for credit and its value.

Which states have lowered their income tax rates?

As of January 1, income tax rate reductions took effect in the following nine states:

• Indiana
• yeah
• Louisiana
• Mississippi
• Missouri
• nebraska
• New Mexico
• North Carolina
• West Virginia

How much did income tax rates fall in these countries?

Indiana It saw one of the smallest cuts, with the income tax rate falling from 3.05% to 3% in 2025.

yeah The flat income tax rate will fall to 3.8% in 2025, down from the top rate of 5.7% last year.

Louisiana It also transitions to a flat rate from the graduated income tax system, with a flat rate of 3% this year, down from the top rate of 4.25% in 2024. Those in the state’s largest income bracket, $30,000 to $40,000, will pay just $338 annually. In income taxes.

Mississippi The tax rate saw a slight reduction for 2025, falling to 4.4% from 4.7% last year. Officials there have also floated a goal of eventually eliminating state income taxes entirely.

Missouri It is another state that had a smaller cut this year, falling to 4.7% from 4.8%.

nebraska The income tax rate was reduced to 5.2%, down from 5.84% last year.

New Mexico It will retain its graduated income tax rate, with two of the six income brackets seeing a decline in 2025. Those earning less than $5,500 a year saw their income tax rate drop to 1.5% from 1.7%, while those earning between $16,500 and And $33,500 had their income tax rate reduced to 4.3% from 4.7%.

North Carolina The interest rate fell to 4.5% from 4.75% last year. The state also plans to lower the rate to 3.99% in 2026.

in West Virginiaresidents can expect to pay 4% lower overall income taxes in 2025, although specific rates were not reported. The state is another where lawmakers have also floated the goal of completely eliminating income taxes altogether.

For more, find out If you are eligible for the savings credit.