State Individual Income Tax Rates and Brackets, 2026
Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
9 min readIndividual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
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Denmark (55.9 percent), France (55.4 percent), and Austria (55 percent) levy the highest top personal income tax rates in Europe.
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One area of the tax code in which extreme complexity and low compliance go hand-in-hand—and where reform is desperately needed—is in states’ nonresident individual income tax filing and withholding laws.
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More than 175 countries worldwide—including all major European countries—levy a value-added tax (VAT) on goods and services. EU Member States’ VAT rates vary across countries, though they’re somewhat harmonized by the EU.
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Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
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As policymakers consider reforms to the individual income tax, understanding the types of income that make up the individual income tax base can help them understand the trade-offs of different changes to the tax system.
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Some European countries have raised their statutory corporate rates over the past year, including Estonia, Lithuania, and Slovakia.
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Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Explore the IRS inflation-adjusted 2026 tax brackets, for which taxpayers will file tax returns in early 2027.
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The worldwide average statutory corporate tax rate has consistently decreased since 1980 but has leveled off in recent years. In the US, the 2017 Tax Cuts and Jobs Act brought the country’s statutory corporate income tax rate from the fourth highest in the world closer to the middle of the distribution.
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Many policies, such as minimum wage levels, tax brackets, and means-tested public benefit income thresholds, are denominated in nominal dollars, even though a dollar in one region may go much further than a dollar in another. Lawmakers should keep that reality in mind as they make changes to tax and economic policies.
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Americans may be surprised to see just how much they are taxed for renting a car.
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In most European OECD countries, corporate income is taxed twice, once at the entity level and once at the shareholder level.
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
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22 of the 27 EU Member States have implemented both the income inclusion rule and the qualified domestic minimum top-up tax in 2025.
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In addition to the federal estate tax, which has a top marginal rate of 40 percent, 12 states and the District of Columbia impose estate taxes, while five states levy inheritance taxes.
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While there are many factors that affect a country’s economic performance, taxes play an important role. A well-structured tax code is easy for taxpayers to comply with and can promote economic development while raising sufficient revenue for a government’s priorities.
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The past four years have brought significant focus on state income tax reform and relief, and with that, something of a flat tax revolution.
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How will recent federal tax changes affect you?
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Wireless consumers continue to be burdened with high taxes, fees, and government surcharges in many states and localities throughout the country.
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