More States Have Approved Flat Tax Rates for 2026: Here's How Much You Could Save and Who Benefits Most

Some states are moving to single‑rate income taxes or cutting existing brackets. That could change how much you keep every payday, especially if you’re thinking about where to live or work next. When you purchase through links on our site, we may earn an affiliate commission. Here’s how it works. Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.You are now subscribedYour newsletter sign-up was successfulWant to add more newsletters?Delivered dailyKiplinger TodayProfit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.Sent five days a weekKiplinger A Step AheadGet practical help to make better financial decisions in your everyday life, from spending to savings on top deals.Delivered dailyKiplinger Closing BellGet today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.Sent twice a weekKiplinger Adviser IntelFinancial pros across the country share best practices and fresh tactics to preserve and grow your wealth.Delivered weeklyKiplinger Tax TipsTrim your federal and state tax bills with practical tax-planning and tax-cutting strategies.Sent twice a weekKiplinger Retirement TipsYour twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirementSent bimonthly.Kiplinger Adviser AngleInsights for advisers, wealth managers and other financial professionals.Sent twice a weekKiplinger Investing WeeklyYour twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.Sent weekly for six weeksKiplinger Invest for RetirementYour step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.In recent years, more states have adopted a single income tax rate, or "flat tax." Unlike progressive systems, where tax rates rise as income increases, a flat tax applies the same rate to all taxable income.Flat taxes could make certain places more appealing for those looking to keep more of their paycheck. That's likely something people are thinking about as tax season wraps up.Supporters say flat taxes are easier to understand and plan for and could make some states more competitive. (That could be helpful as people leave high-tax states like California and New York for states with lower tax rates.)Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special IssuesProfit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.Profit and prosper with the best of expert advice - straight to your e-mail.But critics warn that flat tax rates often benefit higher-income households more than those with middle or lower income.So the big question is: who really pays more when every dollar is taxed at the same rate? Here’s more of what you need to know.As of this year, more than a dozen states levy a flat income tax. Ohio is the newest addition at 2.75% as of January 1, 2026. (The flat rate applies to income above ~$26,050; income below that is still untaxed.)The following table shows states that have made the shift in recent years.State2026 RatePrior Top RateArizona2.5%4.5%Georgia4.99%, (just changed part of a phased reduction)5.75%Idaho5.3%7.4%Iowa3.8%8.53%North Carolina3.99%5.25%Ohio2.75%4.8%Mississippi4.0%0–5% bracketedNote: Mississippi exempts lower income from taxes, then applies a flat rate to the rest, which is why it’s often grouped with flat-tax states.Here are the states that have had flat rates for a long time.State2026 RateColorado4.40%Illinois4.95%Indiana2.95%Kentucky4.00%Michigan4.25%Pennsylvania3.07%Utah4.5%Wyoming0%Note: Massachusetts taxes most income at a flat rate, with a 4% surtax on income over $1 million.Even at $75,000 in taxable income, the difference between low- and high-rate flat-tax states exceeds $2,000 a year, and it widens at higher incomes.Not everyone is a fan of flat taxes.Critics argue that treating a $50,000 earner the same as someone making $500,000 feels unfair — higher-income households benefit far more, while residents with middle or lower incomes see little relief.Note: This is a simplified example. It assumes gross income equals taxable income and doesn't account for tax deductions, exemptions, credits, or federal taxes.Another argument against flat tax rates is the challenges sometimes created for state budgets. Lower income tax revenue can push lawmakers to adjust or increase other state levies, like sales taxes and property taxes.Similar debates have occurred in other states, with proponents highlighting economic growth and competitiveness, and opponents warning that reduced progressivity can strain funding for essential services.Understanding these trade-offs is important if you’re considering moving to a different state. A lower income tax may look attractive, but other forms of taxation or reduced services and the overall cost of living can sometimes offset the benefit.Flat taxes can generally increase take-home pay for some earners, but everyday pressures like rising housing costs, groceries, gas taxes, and energy bills often eat into that extra cash. That can make the net benefit feel smaller than the numbers suggest.If You’re Middle-ClassThe savings could be tangible but modest.If You're a Higher EarnerThe picture shifts at higher incomes.*These are simplified examples that don't account for federal taxes or other credits, deductions and the like.The income gap is why some argue that flat taxes tend to favor higher earners. While everyone pays the same tax rate, those with larger incomes see the biggest real-dollar savings.In the end, whether a flat tax actually affects your finances depends heavily on your income and where you live.If you’re considering relocating, taxes are only one piece of the puzzle. A state that looks tax-friendly because of a flat income tax (or even no personal income tax) might not necessarily translate to more money in your pocket.Understanding the full picture — income tax, other taxes, and cost of living — can help give you a clearer sense of which states truly help you keep more of what you earn.Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has helped taxpayers make sense of shifting U.S. tax law and policy from the Affordable Care Act (ACA) and the Tax Cuts and Jobs Act (TCJA), to SECURE 2.0, the Inflation Reduction Act, and most recently, the 2025 “Big, Beautiful Bill.” She has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and energy tax credits. Her award‑winning work has been featured in numerous national and specialty publications.