8 States Just Cut Income Taxes for 2026 — Here’s How Much More You’ll Keep

Eight states rang in 2026 with a lower income tax. On January 1, Indiana, Kentucky, Mississippi, Montana, Nebraska, North Carolina, Ohio, and Oklahoma all cut their individual income tax rates, according to the Tax Foundation. Most are small, scheduled steps rather than dramatic overhauls — but a lower rate is a raise you don't have to negotiate, and for some workers it adds up to real money.

Here's exactly what changed, and how much of it you'll actually see in your paycheck.

What the cut is worth in your paycheck

A rate cut only matters in dollars. We ran a single filer earning $75,000 through each state's 2025 and 2026 schedules using the same engine behind our paycheck calculators. The savings are modest but real — and they compound every year the rate keeps falling.

Kentucky leads the pack for a typical middle-income worker — a $75,000 earner keeps about $359 more a year than they would have under the 2025 rate. Nebraska's cut is the largest on paper (5.20% to 4.55%), and it isn't finished: the state is on a glide path to 3.99% by 2027.

Ohio's cut is different — and it favors higher earners

Ohio didn't just trim a number. It eliminated its top bracket, leaving a single 2.75% rate on income above $26,050. For someone earning $75,000, the 2026 bill is essentially unchanged, because that income was already taxed at 2.75%. The savings land on higher earners who used to pay 3.125% on income over $100,000 — a reminder that how a state cuts taxes decides who benefits. That's the theme of the broader flat-tax wave sweeping the states.

The bigger picture

These eight cuts are part of a multi-year wave of state tax reduction. Several of the reductions are triggered automatically when revenue clears a threshold (Kentucky), or are the final step of a phase-down passed years ago (Mississippi, Indiana). Montana and Nebraska both have further cuts already scheduled for 2027. If you live in one of these states, your effective tax rate is likely to keep drifting down — worth remembering when you compare take-home pay across state lines.

Curious what your own paycheck looks like after the change? Open your state's paycheck calculator, or see how the same salary compares in two states with our side-by-side tool.

Methodology

Rate changes are from the Tax Foundation's 2026 State Tax Changes report. Dollar savings are the difference in state income tax between the 2025 and 2026 schedules for a single filer at $75,000, computed with CostByState's tax engine (standard deduction, no pre-tax contributions). Ohio's change is structural, so no single-income figure is shown. See our methodology.