States' income tax rates generally decreased since 2000

Since 2000, many U.S. states have changed their income tax rates. A recent study shows how these rates have shifted from 2000 to 2025. Most states have lowered their top marginal tax rates, while some have eliminated income taxes altogether. In total, 23 states have decreased their top tax rates. Iowa leads with a reduction of 5.18 percentage points. Two states, Tennessee and New Hampshire, have completely removed income taxes. Six other states also do not impose any income tax. On the other hand, 13 states and Washington D.C. have increased their top rates. Washington saw the biggest increase of 7 percentage points. However, this increase applies to capital gains, which are profits from investments like stocks. Some states have switched to flat tax rates, including Arizona and Georgia. This means they now have a single tax rate instead of multiple brackets. Critics argue that flat tax rates can unfairly burden low-income households compared to wealthier taxpayers. Meanwhile, two states, Alabama and Virginia, have made no changes to their tax rates at all. New Jersey experienced the highest top rate increase, just behind Washington. Massachusetts is unique because it changed from having a flat tax to introducing a marginal tax rate for high-income earners. Overall, taxes play a significant role in state revenues and their economies.