One thing that divides the United States of America is the various tax rates. In other words, only some states have the flat tax rate implemented while others use a graduated tax rate. A flat tax is a single fixed rate on income while a graduated tax rate is a percentage that varies based on the level of an individual’s income. 5 states have already adopted the flat tax rate in 2022. Since more and more states are seemingly following this trend, it is safe to assume that America is experiencing a Flat Tax Revolution.
The first states to implement the flat tax were Wisconsin in 1912 followed by Massachusetts in 1917. The other states that hopped in the flat tax band wagon include Colorado in 1987, Utah in 2007, North Carolina in 2014, Kentucky in 2019. These states are now joined with the states that already had a flat tax rate: Indiana, Illinois, Massachusetts, Pennsylvania, and Michigan.
States that are transitioning from graduating tax rates to a flat tax include:
- Iowa at a rate of 3.9 % by 2026
- Mississippi at a rate of 4% by 2026
- Georgia at a rate of 5.49% then to 4.9% by 2023
- Arizona at a rate of 2.5% by 2024
More states including Idaho, Missouri, and Oklahoma will also be adopting the flat tax soon. People in favor of the flat tax flaunt this policy as a benefit of living in the state. The advocacy for the flat tax may inspire the rest of the country to follow suit.
For more of the best information concerning tax rates, deadlines, and other tax factors, visit www.etaxservice.com to connect with our team of experts.