The 10 Lowest Income Tax States in 2026
North Dakota has the lowest income tax rate among states that levy income tax at 1.95% flat. Arizona follows at 2.5%, then Ohio at 2.75%. But watch the local income taxes: Ohio, Indiana, Pennsylvania and Kentucky have low state rates but municipal or county taxes that can push the combined burden well past the headline.
Want zero income tax? That's a different list.
This page covers states that do levy income tax but at low rates. The 9 states with no income tax at all (AK, FL, NV, NH, SD, TN, TX, WA, WY) are covered at /no-income-tax-states and in depth at noincometaxstates.com.
Lowest Income Tax States (2026)
| # | State | Top Rate | Type | Effective @ $75K | Effective @ $100K | Local Tax? | Notes |
|---|---|---|---|---|---|---|---|
| 1 | North Dakota | 1.95% | Flat | 1.6% | 1.7% | No | Flat 1.95% on all taxable income. |
| 2 | Arizona | 2.5% | Flat | 2.1% | 2.2% | No | Flat 2.5% on all taxable income. |
| 3 | Ohio | 2.75% | Graduated | 2.3% | 2.4% | Yes | Graduated brackets topping out at 2.75% on income above $26,050. Upper bracket eliminated; flat 2.75% on non-business income over $26,050 from 2026 (HB 96), income below $26,050 untaxed, Ohio Dept of Taxation verified. Flagged for local income tax in our dataset; the local income tax guide has the jurisdictions and rates. |
| 4 | Louisiana | 3% | Graduated | 2.7% | 2.8% | No | Graduated brackets topping out at 3% on all taxable income. Graduated brackets (top 4.25%) repealed; flat 3% on all income from 2025 (Act 11, 2024 Third Extraordinary Session), Louisiana DOR verified. |
| 5 | Indiana | 3.05% | Flat | 2.7% | 2.8% | Yes | Flat 3.05% on all taxable income. Flagged for local income tax in our dataset; the local income tax guide has the jurisdictions and rates. |
| 6 | Pennsylvania | 3.07% | Flat | 2.7% | 2.8% | Yes | Flat 3.07% on all taxable income. Flagged for local income tax in our dataset; the local income tax guide has the jurisdictions and rates. |
| 7 | Kentucky | 3.5% | Flat | 3.2% | 3.2% | Yes | Flat 3.5% on all taxable income. Flat rate cut to 3.5% on Jan 1, 2026 (from 4.0% in 2025) under HB 1 (2025 session), Kentucky DOR verified. Flagged for local income tax in our dataset; the local income tax guide has the jurisdictions and rates. |
| 8 | Iowa | 3.8% | Flat | 3% | 3.2% | Yes | Flat 3.8% on all taxable income. Flat 3.8% (SF 2442, 2024; reached 2025, held 2026); now uses the federal standard deduction (was graduated up to 8.53%). Flagged for local income tax in our dataset; the local income tax guide has the jurisdictions and rates. |
| 9 | Arkansas | 3.9% | Graduated | 3.3% | 3.5% | No | Graduated brackets topping out at 3.9% on income above $89,600. |
| 10 | North Carolina | 3.99% | Flat | 3.5% | 3.6% | No | Flat 3.99% on all taxable income. Flat rate cut to 3.99% on Jan 1, 2026 (from 4.25% in 2025; 4.5% in 2024) under the 2022 reform glide path, NCDOR verified. |
Membership and ordering of this list are computed from our 51-row state dataset by top marginal rate, with ties broken by the effective rate at $250,000. Nothing here is hand-picked, so this list and the highest-rate list cannot contradict each other. Effective rates are for single filers taking the standard deduction. The local tax column shows whether cities or counties in the state levy additional income taxes; the amounts are in the local income tax guide. Source: state DORs, Tax Foundation. Updated June 2026.
Watch Out: Low State Rate Does Not Mean Low Total Income Tax
Indiana has a 3.05% flat state rate, one of the lowest in the country. But all 92 Indiana counties levy a county income tax ranging from 0.5% to 3.13%. A resident of Marion County (Indianapolis) pays 3.05% state plus 2.02% county, totaling 5.07%. Pennsylvania's 3.07% state rate is similarly low on paper, but Philadelphia residents face 6.82% combined. Always check local income taxes. See the full local income tax guide.