Congratulations are in order for multiple states that moved in the right direction in 2024 for tax freedom. Their policies contribute to further competition among the states—the best of federalism.

On New Year’s Eve, Patrick Gleason, a Forbes contributor and vice president of state affairs at Americans for Tax Reform (ATR), published this good news:

The number of states with a flat rate income tax has grown by more than 50% over the past decade, rising from nine in 2013 to 14 in 2024. On New Year’s Day 2025, the ranks of flat income tax states will grow by two.

 

Among the new flat tax states in 2025 is Iowa. Under the leadership of Governor Kim Reynolds (R), the Hawkeye State moved from a progressive income tax system with a top rate of 8.98% to a 5.7% top rate in 2024. On January 1, 2025, Iowa shifts to a 3.8% flat income tax. Iowa’s inheritance tax also completes a phaseout that legislators approved in 2021.

 

On the first day of 2025, Louisiana moves from a graduated income tax with a bottom rate of 1.85% and a top rate of 4.25%, to a 3% flat income tax in accordance with legislation enacted by Governor Jeff Landry (R) in early December.

ATR released this new map to illustrate the state of play:

As of 2025, there are eight states with no income tax, and half of U.S. states have either a flat tax or no income tax at all.

North Carolina reduced its flat income tax from 4.5% to 4.25% on New Year’s Day. A year from now, on New Year’s Day 2026, North Carolina is scheduled to cut its rate again to 3.99%.

New Hampshire has never had personal income tax, and as of New Year’s Day, it also removed capital gains tax. 

The team at the Committee to Unleash Prosperity notes: “This makes eight states with truly no income again. (The number had dropped to seven when Washington State adopted a capital gains tax a couple of years ago.) Congrats to New Hampshire Governor Chris Sununu for getting this done.”

Americans have voted with their feet, shifting away from high-tax states like California, New York, and Illinois to lower-tax states like Florida, Texas, and the Carolinas. This is affecting congressional districts apportionment, with economically freer states gaining more seats. This is democracy in action, enabled by our Constitution.

Congratulations again to these states that moved toward more freedom. Your actions will pay positive dividends for the future.