Number of countries to cut taxes this year, putting more money in the pockets of some Americans as they battle a cost-of-living crisis caused by inflation.
At least 11 states, mostly led by Republicans, have cut taxes for residents in some way this year, according to the nonpartisan Tax Foundation, a group that seeks lower taxes.
“We’re seeing the end of two years of tax cuts across the country, in response to historically high incomes and the desire for states to remain competitive in the economy,” said Jared Walczak, vice president of government projects at the Tax Foundation.
Here’s a closer look at where state taxes are being cut.
BUSINESS TAXES ARE GOING UP AS OUR ECONOMY IS FREAKING WATER
Arizona adopted a flat tax plan that eliminated its old income tax scale, which started at 2.59% and had a top tax of 4.5% on income over $159,000 per year for individuals. All taxpayers in the state will now pay a higher rate of 2.5%.
“This tax relief keeps Arizona competitive and maintains our reputation as a job magnet and generator of opportunity,” former Arizona Gov. Doug Ducey, a Republican, said in a statement in September.
In total, the plan would save taxpayers an estimated $1.9 billion next year, though critics say the plan benefits wealthy Arizonans.
The top personal income tax rate in Arkansas has been reduced to 4.9% from the previous top of 5.9%.
NEW YORK, CALIFORNIA IS WONDERFUL AS OTHER AMERICANS LOWER TAX BENEFITS
The change, which goes back to 2022, accelerates a rate cut that was scheduled to begin in the 2025 tax year.
Idaho adopted a flat personal income tax rate of 5.8% that will take effect this year.
That compares to a previous peak of 6%.
The personal income tax rate has been reduced to 3.15% from 3.25%, effective in 2023 and 2024. There are factors that can cause them to further reduce the speed to 2.9% if the specified conditions are met.
Iowa will begin phasing in a 3.9% flat tax this year, though the change takes effect in four years, so some residents will see the benefits sooner than others.
The $1.9 billion tax cut — signed into law last year by Republican Rep. Kim Reynolds — also eliminates taxes on retirement income and lowers corporate taxes.
“With this bill, Iowa now has the fourth lowest per capita income tax in the nation,” Reynolds said in a statement. “There has never been a better time in Iowa for bold, sustainable tax reform.”
Kansans looking to save money on groceries this year are in luck: The state has implemented the first phase of a plan to eliminate food taxes. From Jan. 1, the country’s food supply was reduced to 4% instead of 6.5%.
The tax will continue to decrease until it reaches zero in 2025.
NEW IRS TAX BILLS START IN 2023, WHICH MEANS YOUR INCOME COULD BE BIGGER
Starting in January, Kentucky lowered its personal income tax while expanding its tax base. The personal income tax rate has dropped to 4.5% from 5%, but sales tax will now be applied to a range of new services including car rental, ride sharing and taxi services. On top of that, a 6% sales tax will be applied instead of the general sales tax.
Republican Gov. Mike Parson signed into law last year a $760 million tax cut, which he hailed as “the largest tax cut in the history of the state.”
Under the new tax law, the top personal income tax rate in Missouri fell to 4.95% in January from the previous level of 5.3%. (The tax rate was set to drop to 5.2% this year).
On top of that, the first $1,000 of income is now tax-free.
Mississippi is transitioning to a flat tax system, effective in January. The 4% tax on taxable income between $5,000 and $10,000 is removed; instead it is a flat rate of 5% on income over $10,000.
The tax rate will drop to 4.7% in 2024, 4.4% in 2025 and 4% in 2026.
CLICK HERE TO LEARN MORE FROM THE FOX BUSINESS
New York has accelerated income tax cuts for middle-class families, with the rate cuts planned for 2025 now scheduled to take effect this year.
The tax rate on income between $13,900 and $80,650 for single filers will drop to 5.5%. For individual filers earning between $80,650 and $215,400, the tax rate drops to 6%>
That marks a drop from the 2022 tax year when the applicable rates for those income levels were 5.85% and 6.25%.
North Carolina’s marginal tax rate drops to 4.75% in 2023, down from the previous rate of 4.99%.