More States Are Moving To Flat Taxes — Here’s What It Means For You

There’s a tax trend sweeping across the country that could help your bottom line. In just the past three years, six states have moved from graduated personal income tax rates to a flat tax — and more state flat rates are on the way.

With a graduated tax rate structure (like the federal income tax), there are multiple tax rates. Your income is divided into portions, or brackets, each of which faces a different tax rate. Your effective tax rate is a blend of those rates, and ultimately depends on your income, with wealthier people paying higher rates. But with a flat tax, everyone pays the same rate.

Are taxpayers better off with a flat tax? It depends. While proponents point to the lower tax burden typically associated with flat taxes, critics complain that the tax savings disproportionally go to the rich.

These states have, or will soon have, a flat income tax

In 2025, there are 14 states that impose a flat tax, according to a Tax Foundation report (see the table below). And the list is growing. Ohio will impose a flat tax starting in 2026. Kansas will likely have a single tax rate at some point in the future, too. (However, Kansas will have to meet certain revenue goals before its flat tax takes effect, which could take several years.)

The remarkable thing is that there were only seven states with a flat tax before 2019. So, the number of flat-tax states doubled in just the past six years. Since 2023 alone, six states — Arizona, Georgia, Idaho, Iowa, Louisiana, and Mississippi — have joined the club for 2025.

States with a flat-rate personal income tax

With the addition of Ohio and Kansas, the number of states with a flat tax jumps to 16. That’s nearly 40 percent of the 41 states with a personal income tax (nine states don’t have an income tax). Before 2019, only 17 percent of states with an income tax used a single, flat rate.

Don’t be surprised if more states hop on the flat tax bandwagon, too. Lawmakers in several states — including Missouri, Oklahoma, and South Carolina — have seriously considered a flat rate in recent years. While they weren’t able to get a flat tax across the finish line, they might try again in the near future. Other states could move to a flat rate as well in the next few years.

Why states are moving to flat taxes

A few factors are fueling the flat tax trend. For instance, some states are hoping to increase their population and boost their economy.

“More states are recognizing that the states with low flat income tax rates, or no income tax at all, have consistently experienced the highest levels of net inbound migration year after year,” says Katherine Loughead, senior policy analyst and research manager at the Tax Foundation. “They also benefit from consistently strong economic growth.”

States are also in an ongoing competition with each other, which helps the trend gain traction. “States are seeing their neighbors move to flat tax structures, seeing them reduce their income tax rate and learning that this is a solid way to gain a competitive advantage and attract individuals and businesses to their state,” Loughead says.

The recent acceleration of the flat tax trend may also be rooted in the post-Covid economic environment. State tax revenues grew faster than expected for several years after the pandemic, Loughead notes. Many state lawmakers wanted to return some of that money to their residents in a way that would also make their tax structure more competitive.

Other tax policy experts see the flat tax trend as simply a way to cut taxes for wealthy taxpayers. “The main effect of moving to a flat tax is to cut taxes for rich people, and that is the overriding goal,” says Carl Davis, research director for the Institute on Taxation and Economic Policy (ITEP).

He also notes that the move to a flat tax is often presented as comprehensive tax reform. “But the practical effect is that the largest tax cuts are going to be steered toward high-income people, because they’re bringing down the rates most dramatically for high-income earners,” Davis says.

Are flat taxes good for taxpayers?

If your state adopts a flat tax, there’s a good chance your state income tax rate will go down. That’s because states tend to set the new flat rate at or below the lowest rate that existed under their graduated tax rate system. Flat rate provisions are sometimes coupled with other tax breaks, too — such as a larger standard deduction — which provides additional tax relief.

However, how much of a tax cut you receive — if any — typically depends on your income level. When states switch from graduated tax rates to a flat rate, “a low-income family is often going to receive no tax cut from that kind of swap, a middle-income family may receive a modest tax cut and a high-income family will receive a very large tax cut,” Davis says.

This is reflected in ITEP data comparing how much of a taxpayer’s income goes toward state income taxes. Lower-income people fare better in states with graduated income tax rates than in states with a flat tax, according to the ITEP data. However, middle-income people pay a lower share of their income to state income taxes in flat-tax states. And the flat-tax advantage is even greater for the richest taxpayers. 

There are also other pros and cons for taxpayers when a state moves from graduated income tax rates to a flat tax. Advantages of flat rates include:

• It’s easier to estimate your tax bill.
• Your tax rate won’t go up if you earn more money.
• It’s often harder for states to increase a flat rate, since all taxpayers end up paying more.

Some of the drawbacks of flat taxes include:

• Wealthier taxpayers don’t pay their “fair share” with flat rates, according to some critics.
• Services may be cut when state revenue is reduced.
• Sales taxes, excise taxes and/or property taxes might be raised to offset lost income tax revenue.

Bottom line

More states are cutting taxes by replacing their graduated income tax rates with a flat rate. The trend toward flat taxes doesn’t seem like it will slow down any time soon, either. If fact, it’s not inconceivable that half the states with an income tax will have a flat tax within the next five to 10 years.

But while states often reduce taxes for everyone when they transition to a single tax rate, the more you make, the lighter your state tax burden tends to be in flat-tax states. As a result, flat taxes are often seen as inequitable and not worth the reduction in revenue, even if they boost economic growth within the state.