January 25, 2007

States Hold Tax Rates Steady in 2006

For media inquires please email Brian Phillips or call 202.464.5102

WASHINGTON, D.C. - Curtis Dubay, Tax Foundation economist and co-author of the State Business Tax Climate Index, has recently updated the State Individual Income Tax Rates for 2006. 

Surprisingly, not a single state increased its tax rates.

"Primarily, strong economic growth and low unemployment helped keep rates from rising," said Dubay.  "The trend across states continues to be to lower rates and broaden brackets." 

Advocates for sound tax policy, such as the Tax Foundation, have reason to cheer as lawmakers across the nation are seeing the benefits of broad tax bases, low rates, and stable tax structures. 

"Currently, there are several states that are looking at improving their tax structures," said Dubay. "Lowering tax rates is an easy way to keep a state competitive, attract new business, and promote growth." 

Further analysis:

• New York allowed two temporary income tax rates of 7.375% over $100,000 and 7.7% over $500,000 to expire. 
• Arizona cut its rates across the board, lowering its top rate from 5.04% to 4.79%.
• Nebraska increased the size of its top two brackets.
• New Mexico continued to lower its top rate, dropping it from 5.7% to 5.3%. 
• Ohio continued the phase-down of its rates and its top rate now rests at 6.87%, down from 7.185% for tax year 2005. 
• Oklahoma and Utah widened their brackets. 
• Washington, DC lowered its rates and widened its top bracket. 

Full Data

For media inquires please email Brian Phillips or call 202.464.5102