The beginning of 2026 will bring tax relief for millions of taxpayers in the United States. In a context of persistent inflation and high living costs, several states have decided to reduce their individual income taxes. These measures could mean more money in the pockets of many families at the start of the year. According to a recent analysis by the Tax Foundation, nine states will implement cuts to their income tax rates starting January 1, 2026. These reductions are part of a strategy that began during the pandemic, when state budgets grew thanks to extraordinary federal aid. Those who support these measures argue that tax cuts boost economic growth and make states more attractive to workers and businesses. However, organizations like the Center for Budget and Policy Priorities (CBPP) warn that lowering or eliminating these taxes can limit investment in essential public services, such as education and infrastructure. Despite the controversy surrounding the political issue, for the vast majority of workers, the cut means more money in their hands. Here are the nine states that will cut taxes at the beginning of 2026. 1. Georgia will be one of the states adjusting its rate. The income tax will decrease from 5.19% in 2025 to 5.09% in 2026. According to WABE, an NPR affiliate in Atlanta, the state plan calls for annual reductions of 0.10% until it reaches 4.99%. Some legislators have even proposed eliminating the tax altogether. 2. Indiana will also see a reduction. Its flat rate will drop from 3% to 2.95% in 2026, as part of a budget bill passed in 2023. The plan calls for another cut in 2027, when the rate will fall to 2.9%. 3. In Kentucky, the individual income tax will decrease from 4% to 3.5%. This reduction is in response to a 2022 law that triggers automatic cuts if certain revenue and tax reserve targets are met, according to Louisville Public Media. 4. Mississippi will reduce its rate from 4.4% to 4% in 2026. The Tax Foundation notes that this will be the final phase of a phased plan. Furthermore, a law signed by Governor Tate Reeves will allow for further reductions in the tax rate, potentially reaching 0% in the future.

5. Montana will adjust its top marginal tax rate, which will decrease from 5.9% to 5.65% in 2026. The legislation also expands access to the lowest tax bracket, benefiting more taxpayers.

6. Nebraska will reduce its rate from 5.2% to 4.55%. However, the state faces a budget deficit of $432 million, according to the CBPP. Some legislators have called for a pause in future cuts to stabilize public finances.

7. In North Carolina, the flat rate will decrease from 4.25% to 3.99%. Although the governor is a Democrat, the Republican legislature has pushed through these reductions as part of its economic agenda.

8. Ohio will apply a flat rate of 2.75% to non-business income exceeding $26,050. The state House of Representatives stated that this measure “makes Ohio more competitive, simplifies the tax code, and stimulates revenue,” according to an official statement.

9. Oklahoma will also reduce its top marginal tax rate, from 4.75% to 4.5%. The tax reform passed this year consolidated six tax brackets into just three.

These state changes are in addition to potential federal benefits. The new Republican tax law raised the SALT deduction limit from $10,000 to $40,000. Piper Sandler estimates that refunds could be up to a third higher, representing about $1,000 more per taxpayer. While a percentage point or half a percentage point might not seem like much, when considering workers' income, it can translate into a few extra dollars for their household. You may also be interested in:

8. Ohio will apply a flat rate of 2.75% to non-business income exceeding $26,050. The state House of Representatives stated that this measure “makes Ohio more competitive, simplifies the tax code, and stimulates revenue,” according to an official statement.

9. Oklahoma will also reduce its top marginal tax rate, from 4.75% to 4.5%. The tax reform passed this year consolidated six tax brackets into just three.

These state changes are in addition to potential federal benefits. The new Republican tax law raised the SALT deduction limit from $10,000 to $40,000. Piper Sandler estimates that refunds could be up to a third higher, representing about $1,000 more per taxpayer. While a percentage point or half a percentage point might not seem like much, when considering workers' income, it can translate into a few extra dollars for their household. You may also be interested in:

8. Ohio will apply a flat rate of 2.75% to non-business income exceeding $26,050. The state House of Representatives stated that this measure “makes Ohio more competitive, simplifies the tax code, and stimulates revenue,” according to an official statement.

9. Oklahoma will also reduce its top marginal tax rate, from 4.75% to 4.5%. The tax reform passed this year consolidated six tax brackets into just three.

These state changes are in addition to potential federal benefits. The new Republican tax law raised the SALT deduction limit from $10,000 to $40,000. Piper Sandler estimates that refunds could be up to a third higher, representing about $1,000 more per taxpayer. While a percentage point or half a percentage point might not seem like much, when considering workers' income, it can translate into a few extra dollars for their household. You may also be interested in: