income taxes US

Some states in the United States, 11 in total, lowered the percentage of income taxes that must be paid for this year.

Some states in the United States, 11 in total, lowered the percentage of income taxes that must be paid for this year. In Globe Live Media we are going to talk specifically about each of them

The 2023 tax season began on Monday, January 23. This means that US taxpayers can now send their declarations of the income they obtained during 2022. Generally, those who must declare state taxes have a date to submit their forms that is usually on par with the federal one. What must be highlighted is that in 11 states of the country they will benefit, since the percentages to be paid for income taxes were reduced.

This means that by this year, 2023, the residents of these 11 states will pay less taxes at the state level. In the federal section, the Internal Revenue Service (IRS) has already announced the percentage that the different tax brackets increased, which are based on inflation.
It should be noted that the common denominator of these 11 states is that the majority are led by Republican leaders. “We are seeing the culmination of two years of significant tax cuts across the country, in response to record high revenues and a desire for states to remain competitive in a much more mobile environment,” said Jared Walczak, vice president of state projects. from the Tax Foundation, a nonpartisan group that lobbies for lower taxes.

The states that will charge less taxes are:

1.- Arizona
In Arizona, income taxes used to go up gradually. The lowest percentage paid was 2.59% and the maximum tax that could be charged on earned income was 4.5%. This percentage applied only to taxpayers who had earnings of more than $159,000 annually.

Today, things in terms of taxes have changed for Arizona. The state has adopted a flat tax plan, which eliminates gradual escalation. Any Arizona taxpayer is going to pay a rate of 2.5% and there is no more.

“Any member or manager of an LLC in Arizona has to pay themselves through profits. These earnings are reflected in your personal tax return and are calculated at the time of paying the Income Tax. The standard Arizona state tax rate is 2.5% and is applied to your earnings. You have the opportunity to claim all allowances and standard deductions when filing your tax return,” the Arizona government explains on its website.

According to estimates, with this change, taxpayers will save about $1.9 billion in 2024, although critics say the plan largely benefits wealthy residents.

The maximum rate to pay for income tax in Arkansas was 5.5% but they made a change in the modus operandi in the state and it was promulgated that as of 2023, it would be 4.9%, which sees a clear reduction of almost one porcentual point.

Although the change came into effect for 2023, the authorities reported that it will be retroactive to 2022. Originally it was planned to start with this fiscal plan for 2025, but given the high inflation that Americans are facing, the change was accelerated. For now.

“The Arkansas Department of Revenue has published the revised withholding formula reflecting the changes made by SB.1 (Act 2), enacted August 11, 2022. Retroactive to January 1, 2022, SB. 1 reduces the top marginal income tax rate from 5.5% to 4.9% and increases the level of income at which the highest tax rate applies,” the Arkansas government reported on its website.

The government estimated taxpayer savings of more than $400 million.

Idaho used to charge its taxpayers a 6% rate for their income taxes. Now, the same government approved implementing a fixed rate that will be 5.8%. This will enter into force in 2023.

This marks the third time Idaho lawmakers have cut individual and corporate income tax rates since May 2021, further strengthening Idaho’s position as a leader in pro-growth tax reform over the past two years. .

This legislation was signed by Governor Brad Little, in September 2022. As of January 3, 2023, the tax rate imposed on corporations is 5.8%, reduced from 6%. As of January 3, 2023, the tax rate imposed on individuals, trusts, and estates is 5.8% of taxable income over $2,500 (over $5,000 for joint returns, surviving spouses, and heads of household).

4.- Indiana
In Indiana they had a flat rate on individual income that was 3.25% and that has been reduced to 3.15% for 2023 and 2024. And in fact, according to state leaders, the rates could continue to be reduced further for following years, as long as certain conditions are met, which have not yet been specified. But, experts say that rates of up to 2.9% could be reached.

That is, if state revenues meet certain thresholds, the state rate will drop to 3.1% for 2025 and 2026, 3% or 3.1% for 2027 and 2028, and 2.9%, 3% or 3.1% after 2028.

5.- Iowa
The idea of the Iowa government is to gradually reduce the percentage of flat taxes that are charged to its residents. This will be 3.9%.

Iowa will also eliminate state taxes on retirement income beginning in 2023 and enact new tax breaks for retired farmers and people retiring from employee-owned businesses. The corporate tax rate will also be reduced over time, along with reductions in some corporate tax credits.

6.- Kansas
What will be reduced here is the amount of tax that Arkansas residents will pay on food. The first phase of a plan that seeks to eliminate these taxes entirely began on January 1, 2023: it was reduced from 6.5% to 4%. And this reduction will be followed by others until reaching zero by the year 2025.

7.- Kentucky
In January 2023, a new law came into force that reduces the individual income tax rate, which went from 5% to 4.5%. Its sales tax base has also been broadened, meaning from now on it will apply to a number of new services, including car rental, ride-sharing and taxi services. On top of that, a 6% excise tax will be applied instead of the general sales tax.

“The new individual income tax rate for 2023 has also been set at 4.5%, a .5% reduction from the 2022 tax rate,” the Kentucky tax department confirmed.

8.- Missouri
A new tax law came into force that specifies that from now on, the state of Missouri will pay a maximum individual income tax rate of 4.95% versus the rate of 5.3% that was previously being paid. On top of that, the first $1,000 of income is now tax-free.

Other changes in this new law involve allowing a further reduction in the top income tax rate from 0.15% to 4.8% when net general income increases by $175 million; eliminate income taxes for individuals earning less than $13,000 a year and couples earning less than $26,000 and allow three additional reductions from the top income tax rate of 0.1% in future years when overall income net increase by $200 million, adjusted for inflation.

9.- Mississippi
Starting in January, the state will have a tax system that will be fixed: a 4% tax on taxable income between $5,000 and $10,000 is eliminated and in its place, a single rate of 5% on income above $10,000. .

Additionally, the tax rate will drop to 4.7% in 2024, 4.4% in 2025, and 4% in 2026. Seniors will also like the fact that most retirement income is exempt from Mississippi tax.

10.- New York
In the state of New York, it had already been approved that the income tax rates for middle-class families would be reduced by 2025, however, state leaders decided not to wait any longer and now they will be effective to take effect at from this same 2023.

In New York everything will depend on the income you have. Those who have between $13,900 dollars and $80,650 dollars in earnings, their tax rate will be 5.5%, as long as they are individual taxpayers.

Now, for those who have income between $80,650 dollars and $215,400 dollars, they will have to pay a tax rate of 6%.

11.- North Carolina
In the state of North Carolina, a tax reduction was also made that will take effect as of this 2023. Its single tax rate will go from 4.99% to 4.75%. In the state, many taxpayers pay income taxes at an above-average rate, however, the local government has said that these rates will continue to decline in the coming years.

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