This new rate will see Arizona improve from having the nation’s 16th lowest top individual income tax rate to 10th lowest.Īside from the immediate relief that comes with the move to a lower, flat income tax rate, proponents of such reform note that flat taxes provide lasting taxpayer protection by making it more politically difficult to raise the income tax in the future. An April court ruling confirmed the state’s new flat 2.5% income tax rate, which was enacted by Arizona legislators and Governor Doug Ducey (R) in 2021, will be allowed to take effect.Īrizona’s current top income tax rate of 4.5% will be gradually brought down to a flat 2.5% rate over the next few years. Revenue trigger-facilitated tax reform has helped North Carolina realize repeated budgets surpluses at the same time that billions of dollars have been returned to taxpayers in the form of income tax relief.Īnother state where lawmakers are now using revenue triggers to reduce and flatten the income tax is Arizona. Revenue triggers are a tool that North Carolina lawmakers previously used to facilitate income tax relief. Under Georgia’s new reform, the state income tax rate draw down will be contingent upon certain revenue triggers being hit. Most recently, Governor Brian Kemp (R-Ga.) signed legislation into law at the end of April that will reduce and flatten Georgia’s personal income tax rate, taking it from a top rate of 5.75% down to a flat 4.99% by 2026. Imitation is the highest form of flattery and many states have been flattering North Carolina. The number of states where lawmakers have passed or introduced similar tax reform has increased over the past year. North Carolina’s latest round of income tax rate reduction is the result of a bipartisan budget deal enacted last year that, in addition to the personal income tax relief, will entirely phase out North Carolina’s corporate income tax over the next decade, making North Carolina only the third state with no corporate income tax or business gross receipts tax.
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