One state, Massachusetts, has an income tax rate increase taking effect. Three of these states-Arizona, Idaho, and Mississippi-are converting from graduated-rate income tax structures to flat tax structures on New Year’s Day. Individual Income Tax ChangesĮleven states have individual income tax rate reductions taking effect on January 1: Arizona, Idaho, Indiana, Iowa, Kentucky, Mississippi, Missouri, Nebraska, New Hampshire (interest and dividends income only), New York, and North Carolina. Most of these changes represent net tax reductions, the result of an unprecedented wave of rate reductions and other tax cuts in the past two years as states respond to burgeoning revenues, greater tax competition in an era of enhanced mobility, and the impact of high inflation on residents.
On January 1, 2023, thirty-eight states have noteworthy tax changes taking effect. Most state tax changes take effect at the beginning of the calendar year (January 1) or at the beginning of the fiscal year (July 1 for most states).
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