State Tax Law Changes for 2026
Several states have enacted significant tax changes for the 2026 tax year. Here's what you need to know.
Overview of 2026 Changes
The 2026 tax year brings notable changes across multiple states. Several states continue their trend of reducing income tax rates, while others have adjusted brackets for inflation. Indiana, Iowa, Kentucky, Missouri, North Carolina, and Utah all lowered their top income tax rates. Meanwhile, states like Illinois and New York maintained rates but adjusted deductions and credits.
State Rate Changes 2026
| State | Type | Old Rate | New Rate |
|---|---|---|---|
| California | Income Tax | 13.3% | 13.3% |
| Illinois | Income Tax | 4.95% | 4.95% |
| Indiana | Income Tax | 3.15% | 3.05% |
| Iowa | Income Tax | 6.0% | 5.7% |
| Kentucky | Income Tax | 4.0% | 3.5% |
| Missouri | Income Tax | 5.4% | 4.95% |
| New York | Income Tax | 10.9% | 10.9% |
| North Carolina | Income Tax | 4.5% | 4.25% |
| Tennessee | Sales Tax | 7.0% | 7.0% |
| Utah | Income Tax | 4.65% | 4.55% |
Federal Changes Affecting State Taxes
Federal tax changes also impact state taxes since many states use federal adjusted gross income (AGI) as their starting point. Key federal changes for 2026 include inflation-adjusted brackets and standard deductions. Most states that conform to federal tax law have automatically adopted these changes, while others have decoupled from specific provisions.
What This Means For You
These changes can affect your tax bill. Use our calculators to estimate your state tax liability with the updated 2026 rates.