Arizona
Before 2022, some earners in the Grand Canyon State were paying income tax as high as 8%. Wealthier Arizonans faced an extra 3.5% charge on top of the existing 4.5% top income tax rate.
But lawmakers lowered the state’s base tax rates so an individual’s combined rate won’t exceed 4.5%, the nonprofit Tax Foundation explains.
The state is also planning more changes that could, over time, create a 2.5% individual tax rate regardless of income — the lowest flat tax in America. Currently, 2.59% is the lowest rate Arizona residents pay.
“Every Arizonan — no matter how much they make — wins with this legislation,” Gov. Doug Ducey said when the move cleared the legislature. “They will get to keep more of the money they earn under this tax plan.”
However, voters will need to approve the flat tax through a ballot measure in the November 2022 election.
Discover how a simple decision today could lead to an extra $1.3 million in retirement
Learn how you can set yourself up for a more prosperous future by exploring why so many people who work with financial advisors retire with more wealth.
Discover the full story and see how you could be on the path to an extra $1.3 million in retirement.
Read MoreArkansas
Legislation in the Natural State will lower the top income tax rate for individuals from 5.9% to 4.9% over the next four years. For the 2022 tax year, the top rate has been reduced to 5.5%.
The law also gives low-income taxpayers a $60 tax credit, which Gov. Asa Hutchinson says will reduce taxes owed for about 28% of Arkansas taxpayers and eliminate it for more than 100,000 people.
Hutchinson, who signed the reduction into law in a December special session, says the tax cut will still benefit the state’s coffers over time.
“For the average Arkansas family, this tax break could mean groceries on the table, a new set of tires or a less stressful Christmas,” Hutchinson said.
“It allows hard-working Arkansans to keep more of their hard-earned money and also makes Arkansas more competitive with our surrounding states, spurring job creation and economic growth for years to come.”
Louisiana
Taxpayers in the Bayou State can also expect to see a bit less money withheld from their paychecks this year.
Voters approved several tax changes that took effect Jan. 1, including the top individual income tax rate falling from 6% to 4.75%.
Also, individual income tax rates went from 2%, 4% and 6% to 1.85%, 3.5% and 4.25%, respectively.
Sign up for the MoneyWise newsletter to receive more tax tips throughout the 2021-2022 season.
Kiss your credit card debt goodbye
Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.
Explore better ratesNorth Carolina
If you live in the Tar Heel State, your income tax rate fell to 4.99% on Jan. 1.
The decrease from 5.25% is the first of six incremental reductions that, by 2027, will reduce the individual tax rate to 3.99% — one of the country’s lowest.
The budget that ushered in the tax cuts — along with higher education funding and raises for teachers and other public employees — moves North Carolina forward as the state emerges from the pandemic, says Gov. Roy Cooper.
“Our schools, communities, small businesses and families need our help right now, especially as we recover from this pandemic,” Cooper said on Twitter.
Oklahoma
Lawmakers implemented a 0.25% income tax rate reduction, as the top rate fell from 5% to 4.75%.
Another piece of legislation reduced the corporate income tax from 6% to 4%, giving the state more of a competitive advantage, Gov. Kevin Stitt’s office said in a statement.
“Gov. Stitt was proud to sign into law legislation to cut taxes for every Oklahoman so that they can keep more of their hard-earned money and remains committed to making our state’s business taxes among the lowest in the nation to help recruit and retain companies,” the statement reads.
Changes elsewhere in the country
In the District of Columbia, tax rates have gone up for some. The nation’s capital was the only jurisdiction to increase individual income tax rates as of Jan. 1.
Lawmakers voted to raise taxes on the district’s wealthiest earners — individuals earning more than $250,000 — generating more than $170 million over the next four years, according to the DC Fiscal Policy Institute.
The additional funds are expected to help pay for early childhood care and education, support affordable housing and expand the district’s earned income tax credit for working families.
Meanwhile, a tax change of a different sort is happening in Iowa with the phasing out of the state’s inheritance tax.
For the next several years, the tax will be reduced until it’s fully eliminated by the first day of 2025.
After Iowa’s inheritance tax is done away with, only five states — Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania — will continue levying these state taxes.
More from MoneyWise
- The Best Tax Software to File With This Season
- Jim Rogers: Next Bear Market Will Be ‘Worst in My Lifetime’ — He'll Rely on 3 Assets
- Robert Kiyosaki Says We're Already in a 'Technical Depression' — He's Using These 3 Assets for Protection
This 2 minute move could knock $500/year off your car insurance in 2024
OfficialCarInsurance.com lets you compare quotes from trusted brands, such as Progressive, Allstate and GEICO to make sure you're getting the best deal.
You can switch to a more affordable auto insurance option in 2 minutes by providing some information about yourself and your vehicle and choosing from their tailor-made results. Find offers as low as $29 a month.
