Here’s Where In the U.S. Taxes Have Been Lowered In 2022
Here’s some uplifting economic news: A selection of U.S. states have enacted new tax legislation that will allow workers to pay less taxes, and subsequently enjoy larger paychecks and more of the cash they’ve earned. Tax relief can help offset inflation and many of its concurrent costs. As of January 2022, the inflation rate rose to 7.5%, the highest rate in 40 years.
These five states, listed from current lowest to highest tax rate, have made it easier for workers to enjoy financial breathing room by offering a window to tax relief.
In 2022, Arizona lawmakers lowered the state’s base tax rates so that an individual’s combined rate won’t exceed 4.5%, according to the nonprofit Tax Foundation. Before the tax decrease, workers in the Grand Canyon State were paying income tax that soared to 8%, and wealthier Arizonans were expected to pay an extra 3.5% charge on top of a 4.5% top income tax rate. Ouch.
Arizona is considering even more tax changes, including creating a 2.5% individual tax rate regardless of income, which would be the country’s lowest flat tax rate. To date, 2.59% is the lowest tax rate Arizona residents pay.
“Every Arizonan, no matter how much they make, wins with this legislation,” says Governor Doug Ducey. “They will get to keep more of the money they earn under this tax plan.”
Voter approval is needed to pass the flat tax, which will be on the ballot in November 2022.
If you live in the Bayou State, you might find yourself able to buy more, thanks to less money being withheld from your paycheck. Voter-approved tax changes took effect in January of 2022, and include the top individual income tax rate tumbling from 6% to 4.75%. And that’s not all: Individual income tax rates changed from 2%, 4%, and 6% to 1.85%, 3.5% and 4.25%, respectively.
Lawmakers approved a 0.25% income tax rate reduction, which means that the top rate fell from 5% to 4.75%. Additional legislation reduced the corporate income tax from 6% to 4%, hopefully allowing the state to be more competitive in the business sector, according to a statement issued by Governor Kevin Stitt’s office.
“Gov. Stitt was proud to sign into law legislation to cut taxes for every Oklahoman so that they can keep more of their hard-earned money and remains committed to making our state’s business taxes among the lowest in the nation to help recruit and retain companies.”
For North Carolina residents, the income tax rate fell to 4.99% as of January 1, 2022. The decrease from the previous 5.25% rate is only the first of six scheduled reductions that will eventually bring the individual tax rate down to 3.99% — one of the country’s lowest rates.
According to Governor Roy Cooper, the tax cuts will help North Carolina emerge from the COVID-19 pandemic and move forward economically. “Our schools, communities, small businesses, and families need our help right now, especially as we recover from this pandemic.”
For the 2022 tax year, the top income tax rate in Arkansas has been reduced to 5.5 percent; however, legislation in the Natural State will reduce the top individual income tax rate to 4.9% over the next four years. An added bonus: The law also provides low-income taxpayers with a $60 tax credit, which will reduce owed taxes for about 28% of Arkansas taxpayers and eliminate them for more than 100,000 people.
Governor Asa Hutchinson signed the tax reduction into law in December 2021, stating that, “For the average Arkansas family, this tax break could mean groceries on the table, a new set of tires or a less stressful Christmas. It allows hard-working Arkansans to keep more of their hard-earned money and also makes Arkansas more competitive with our surrounding states, spurring job creation and economic growth for years to come.”