2026 State Income Tax Changes: The Master Changelog

The Headline Changes

Detailed Changelog

Per state: 2026 change, prior-year rate, the future glide path through subsequent legislation, and the citing legislative act or regulatory authority.

Iowa: The Big Story of 2026

Iowa is the headline state for tax year 2026. Effective 1 January 2026, Iowa transitioned from a graduated income tax structure with a top marginal rate of 8.53% (the rate in effect through 2022) to a single flat rate of 3.9%. The transition was legislated in Iowa HF 2317 (2022), which began the multi-year reduction in 2023 and culminated in the flat-rate adoption for 2026.

For Iowa filers, the practical impact varies sharply by income. A $50,000 single filer who paid approximately $1,725 in Iowa state income tax in 2024 (graduated brackets averaging around 3.45% effective) now pays approximately $1,950 at 3.9% on the same income (slight increase, because the lower-bracket benefits are gone). A $200,000 single filer who paid approximately $14,500 in 2024 (graduated brackets averaging around 7.25% effective) now pays approximately $7,800 (substantial decrease, because the upper-bracket dollars are no longer taxed at 8.53%).

The flat-rate transition creates a structural reversal. Lower-middle-income filers see modest increases; upper-middle and high-income filers see substantial decreases. Per the Iowa Department of Revenue rates page, the legislative intent was to simplify the tax structure and improve Iowa's competitive position in the regional Midwest tax landscape, where Indiana (3.05% flat), Illinois (4.95% flat), Michigan (4.05% flat) and Wisconsin (graduated 3.5-7.65%) compete for residents and employers.

Mississippi's Continuing Glide Path

Mississippi continues a multi-year reduction in its top marginal rate. Per Mississippi Department of Revenue guidance and the underlying HB 531 (2022), the rate cut from 4.7% (2025) to 4.4% (2026) is one step in a planned glide path:

• 2024: 4.7% on income above $10,000
• 2025: 4.7% on income above $10,000 (held)
• 2026: 4.4% on income above $10,000
• 2027-2029: incremental reductions to 4.0%
• 2030: target 3.5% on income above $10,000

The rate cuts are tied to Mississippi general fund revenue performance: each scheduled reduction takes effect only if revenue grows at the rate projected. The 2026 reduction proceeds because revenue growth in 2024-2025 met the legislative trigger. Future-year reductions are contingent on continued revenue performance.

The Trigger-Based Cuts: Kentucky, Missouri, Michigan

Several states have legislated trigger-based rate cuts that take effect only when state revenue grows above specified thresholds. The mechanism is intended to ensure rate cuts do not produce structural revenue shortfalls.

Kentucky (HB 8 of 2022): The Kentucky personal income tax rate is reduced by 0.5 percentage points whenever certain budget reserve fund triggers are met. The 2026 rate is 4.0%, down from 4.5% in 2024. The next scheduled reduction would bring the rate to 3.5% in a future year, dependent on revenue growth.

Missouri (HB 12 of 2023): Missouri's top rate (currently 4.8%) is reduced by 0.1 percentage points each year that revenue meets the trigger threshold, with a target floor of 3.7%. The 2026 rate is held at 4.8% because the 2025 trigger was not met (revenue growth was within normal range, not above the trigger).

Michigan (HB 4001 of 2023): Michigan reduced its flat rate from 4.25% to 4.05% in 2023 and has held the rate at 4.05% since. Further trigger-based cuts to 3.9% are possible but contingent on revenue performance and have not yet been activated.

What Did Not Change in 2026

Most states held their 2025 rates into 2026. The notable holds:

• California: 1% to 13.3% graduated rates unchanged. Bracket thresholds inflation-adjusted modestly per CA Revenue and Taxation Code section 17041(a). Mental Health Services Tax 1% unchanged.
• New York: 4% to 10.9% graduated rates unchanged. Bracket thresholds inflation-adjusted. NYC personal income tax (3.078% to 3.876%) unchanged.
• New Jersey: 1.4% to 10.75% graduated rates unchanged.
• Pennsylvania: 3.07% flat unchanged.
• Illinois: 4.95% flat unchanged.
• Texas, Florida, Nevada, Tennessee, Washington, Wyoming, South Dakota, Alaska, New Hampshire: No state income tax (unchanged from 2024-2025).
• Massachusetts: 5% flat plus 4% surtax above $1M unchanged.
• Colorado: 4.4% flat unchanged.
• Arizona: 2.5% flat unchanged.

The pattern across 2024-2026 is that high-tax progressive states are holding their rates while flat-tax and lower-rate states are cutting incrementally. The convergence pulls the median state income tax rate downward over time.

State Standard Deduction and Bracket Inflation Adjustments

In addition to rate changes, most states inflation-adjust bracket thresholds and standard deductions annually. The 2026 adjustments for the major states:

• California: Standard deduction $5,540 single (up from $5,363 in 2024); bracket thresholds adjusted at the lowest band by approximately 3%.
• New York: Standard deduction $8,000 single, $16,050 MFJ (modest increases from 2024); brackets unchanged in real terms.
• Federal-conformity states (CO, AZ, MO, MN, NM, ND, etc.): Standard deductions track federal $15,000 single / $30,000 MFJ for 2026.
• Pennsylvania: No standard deduction to adjust; flat rate applies to gross income with limited adjustments.

For most filers the inflation adjustments produce small dollar changes in tax owed, smaller than the rate-change impacts. But for large numbers of marginal filers cumulative inflation adjustments over multiple years matter. See our 2026 State Standard Deductions reference for the full state-by-state map.