The 14 Flat Income Tax States in 2026
14 states use a single flat rate for all income in 2026. Iowa completed its transition from a graduated structure (top 8.53%) to a flat 3.9% rate this year. Kentucky reduced its flat rate to 3.5% and North Carolina reduced to 3.99%. Rates range from 1.95% (North Dakota) to 5% (Massachusetts); Georgia cut its flat rate to 4.99% in 2026 under HB 463.
| State | 2026 Rate | Flat Since | Prior Structure | Notes |
|---|---|---|---|---|
| North Dakota | 1.95% | 2023 | Graduated (reduced over many years) | The lowest flat income tax rate of any state. Oil revenue allows fiscal flexibility. |
| Arizona | 2.5% | 2023 | Graduated (top 4.5%) | One of the sharpest rate reductions in recent US history. Proposition 208 (passed 2020) attempted a 3.5% surtax on high earners; it was struck down. |
| Indiana | 3.05% | Pre-2010 | Flat (unchanged) | Indiana has had a flat rate for decades. The rate has declined slightly over time. |
| Pennsylvania | 3.07% | 2004 | Flat (unchanged since 2004) | Pennsylvania's flat rate has been 3.07% since 2004. No change expected. |
| Kentucky | 3.5% | 2018 | Graduated (top 6%) | Transitioned to flat 5% in 2018, then reduced via revenue triggers: 4.5% (2023), 4.0% (2024-25), 3.5% (2026). |
| Iowa | 3.9% | 2026 | Graduated (top 8.53%) | Completed transition to flat in 2026. Major tax reduction. Competing with neighboring states. |
| North Carolina | 3.99% | 2014 | Graduated (top 7.75%) | NC converted to flat in 2014 and has reduced the rate annually since. Reached 3.99% in 2026; a further cut to 3.49% is projected for 2027 if revenue triggers are met. |
| Michigan | 4.05% | Longstanding | Flat (reduced from 4.25%) | Michigan's rate declined from 4.25% to 4.05% after a revenue-trigger law took effect. |
| Colorado | 4.4% | Longstanding | Flat (reduced from 4.63%) | Colorado's TABOR law requires voter approval for tax increases. Rate reduced from 4.63% to 4.55% in 2020, then to 4.4% via Proposition 121 in 2022. |
| Mississippi | 4.4% | 2026 | Graduated (phasing out) | Reducing from 5.0% toward 3.5% by 2030 via annual reductions. 4.4% is the 2026 figure. |
| Utah | 4.45% | 2008 | Graduated | Utah voters approved a flat tax in 2007. Recent annual cuts lowered it from 4.65% (2023) to 4.45% (2026, SB 60). |
| Illinois | 4.95% | 2017 | Flat 3.75% (temporary 5%, then settled at 4.95%) | Constitutionally mandated flat rate. A 2020 voter referendum to allow graduated taxes was rejected 55-45. |
| Georgia | 4.99% | 2024 | Graduated (top 5.75%) | Converted from graduated to flat in 2024 (5.39%), cut to 5.19% in 2025 and 4.99% in 2026 (HB 463), heading toward 3.99%. |
| Massachusetts | 5.0% (+ 4% surtax above $1M) | 1989 (graduated eliminated) | Various (graduated, then flat) | Technically flat 5% for most income. The 2022 Fair Share Amendment added 4% on income above $1M, creating a two-tier structure. |
Recent Flat-Tax Conversions
Iowa (2026): Eliminated its 9-bracket system (top rate 8.53%) in favor of a flat 3.9%. One of the most dramatic simplifications in recent US state tax history.
Mississippi (ongoing): Phasing from progressive to a flat rate heading toward 3.5% by 2030. The 2026 rate is 4.4%, down from 5.0%.
Georgia (2024 onward): Converted from graduated (top 5.75%) to flat at 5.39% in 2024, cut to 5.19% in 2025 and 4.99% in 2026 (HB 463), now targeting 3.99%.
Kentucky (2018): Reformed from graduated (top 6%) to a flat 5%, then cut via revenue triggers to 3.5% for 2026.
Flat vs Graduated: The Policy Debate
Arguments for flat tax: Simplicity and predictability. Easier for businesses and individuals to plan. No marginal rate cliff discouraging income growth. Easier to administer.
Arguments against flat tax: A fixed percentage takes more disposable income from lower earners than higher earners (regressive in real-dollar impact). Progressive taxes allow lower-income earners to keep more of their first dollars. Most economists consider progressive taxes more equitable on ability-to-pay grounds.
The practical reality: Both systems are used by major economies. Most US states with flat taxes still have graduated federal income tax on top, making the overall system progressive at the combined level.