Urethane Blog

State Taxes 2025

February 18, 2025

Comparing 2025 State Individual Income Taxes Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. Their significance in public policy is further enhanced by individuals being actively responsible for filing their income taxes, in contrast to the indirect payment of sales and excise taxes. The trend continues: Last year continued the historic pace of income tax rate reductions. In total, 28 states enacted and/or implemented individual income tax rate reductions since 2021.Here’s where things currently stand: 27 states and DC have graduated-rate income taxes. 14 states have flat income taxes. 8 states levy no individual income tax at all. Top marginal rates span from 2.5 percent in Arizona and North Dakota to 13.3 percent in California. (California also imposes a 1.1 percent payroll tax on wage income, bringing the all-in top rate to 14.4 percent as of 2024.)