8 States Cutting Income Tax Rates in 2026

Eight states lowered individual income tax rates in 2026, with changes ranging from Indiana’s modest reduction to Nebraska’s major top-rate cut and Mississippi’s continuing phase-down plan – Shutterstock

The 2026 tax year brought lower individual income tax rates to eight states, giving taxpayers a little more room between their paychecks and the tax collector. The changes range from modest reductions to major rate cuts, with several states continuing multiyear plans that could push rates even lower in the years ahead.

That does not mean every resident will suddenly find a giant pile of extra cash hiding in the couch cushions. The actual savings depend on taxable income, deductions, credits, filing status, and the way each state calculates its tax bill. Still, the direction is clear: Indiana, Kentucky, Mississippi, Montana, Nebraska, North Carolina, Ohio, and Oklahoma all lowered individual income tax rates for 2026.