These states may cut down their individual income taxes


Mississippi Senate Press Secretary Arnold Lindsay, right, receives a resolution from a senator at the Mississippi Capitol in Jackson, Miss., Wednesday, Feb. 23, 2022. (AP Photo/Rogelio V. Solis)

(NEXSTAR) – As inflation hits a 40-year high, some lawmakers are looking to give some of their constituents relief. Turning to their budgets overflowing with cash following a year of record-setting surpluses, some states are trying to cut their income tax.

The influx of money, according to The Hill, is largely thanks to quick economic recovery from the COVID pandemic and emergency funding that was sent out to states.

Some states have already passed legislation to slash income taxes.

In Idaho, for example, Gov. Brad Little signed a bill to drop the top individual income tax bracket to 6%, down from 6.5%. Across the country in Indiana, Gov. Eric Holcomb approved a gradual tax cut plan to reduce the state’s income tax from 3.23% to 2.9% over the next seven years.

Iowa Gov. Kim Reynolds signed a law that will phase the state to a flat 3.9% personal income tax by 2026. Earlier this month, a Utah bill was approved by Gov. Spencer Cox to reduce income tax from 4.95% to 4.85%.

The Urban Institute has warned that cutting taxes will only make inflation worse. By giving people more money via tax cuts, they’ll be more inclined to make purchases, increasing the demand for goods when the U.S. is already facing supply chain shortages, Urban Institute senior fellow Howard Gleckman wrote in a Tuesday blog post.

“The income tax cuts, on the other hand, are designed to be permanent,” Gleckman added. He went on to say that many of the proposed or passed income tax cuts “may have less impact on short-run spending.”

Here’s a look at the states who have passed or are considering income tax cuts.


The House recently passed a bill that would reduce the state’s income tax rate from a maximum of 5.75% to 5.25%. The bill now awaits action in the Senate.


The House and the Senate agreed to a tax cut plan to lower income taxes from 4.25% to 3.9%. Gov. Gretchen Whitmer has yet to sign the bill, but she is expected to veto the plan, WOOD reports.


State lawmakers are calling on Gov. Tate Reeves to endorse a House plan to end the Mississippi state income tax, WJTV reports. The plan does not include an increase to the sales tax, something Reeves and the Senate have agreed they don’t want to happen in exchange for a cut income tax.


Lawmakers approved a personal income tax cut in late February. The proposal would cut the top individual tax rate from 6.84% to 5.84%, the Associated Press reports.


The Oklahoma Senate has unanimously approved a bill that would exempt the retirement pay of military members from income tax.

The bill now heads to the House, according to KFOR.

South Carolina

The Senate has passed a $2 billion income tax cut and rebate package, according to WSPA, just a few weeks after the House passed its own income tax cut bill.

Under the Senate’s bill, South Carolina’s highest tax rate would go from 7% to 5.7%. The House’s proposal calls for the same rate to be cut to 6.5% instead, while also cutting the middle tax brackets to 3%.

The Associated Press contributed to this report.

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