State Income Tax Changes — 2025

Alabama's temporary exemption of overtime wages from state income tax expired on June 30, 2025, so overtime compensation paid from July 1, 2025 onward is again fully taxable.

Overtime wages exempt from Alabama income tax (October 1, 2024 - June 30, 2025) → Overtime wages fully taxable from July 1, 2025

Alabama Department of Revenue — Notice: Overtime Exemption Ends June 30, 2025

California created an exclusion from gross income of up to $20,000 per year of federal military retirement pay or Department of Defense Survivor Benefit Plan annuity payments, for tax years 2025 through 2029.

Military retirement pay fully taxable in California → Up to $20,000 per year excluded, tax years 2025-2029

California Franchise Tax Board — 2025 Instructions for Form 540 - What's New

California advanced its specified Internal Revenue Code conformity date from January 1, 2015 to January 1, 2025 for personal income tax purposes, changing numerous conformity items; it does not adopt the later federal One Big Beautiful Bill Act.

Specified IRC conformity date of January 1, 2015 → Specified IRC conformity date of January 1, 2025

California Franchise Tax Board — Tax News, November 2025

Colorado's flat individual income tax rate returned to the statutory 4.40% for tax year 2025 after the temporary TABOR surplus reduction had lowered it to 4.25% for tax year 2024.

4.25% flat (2024, temporary TABOR reduction) → 4.40% flat

Colorado Department of Revenue — Individual Income Tax Guide

Connecticut added a flat $250 to the state earned income tax credit for any EITC-eligible taxpayer with at least one qualifying child, for taxable years beginning on or after January 1, 2025.

State EITC computed solely as a percentage of the federal credit under Conn. Gen. Stat. § 12-704c → Same formula plus an additional flat $250 where the taxpayer has at least one qualifying child

Connecticut Department of Revenue Services — 2025 Legislative Overview - Income Tax

Georgia's flat individual income tax rate was cut from 5.39% to 5.19% for taxable years beginning on or after January 1, 2025.

5.39% flat → 5.19% flat

Georgia General Assembly / Office of the Governor — House Bill 111 (As Passed House and Senate)

Hawaii widened every individual income tax bracket for tax year 2025 without changing the rates: for single filers the 1.4% bottom bracket grew from the first $2,400 of taxable income to the first $9,600, and the 11% top bracket now starts at $325,000 instead of $200,000.

Single: 1.4% to $2,400; 11% over $200,000 (joint: 11% over $400,000) → Single: 1.4% to $9,600; 11% over $325,000 (joint: 1.4% to $19,200; 11% over $650,000)

Hawaii Department of Taxation — Announcement No. 2024-03: Act 46, Session Laws of Hawaii 2024, Relating to Income Tax

Iowa replaced its graduated individual income tax, which topped out at 5.70% in 2024, with a single flat rate of 3.8% beginning in tax year 2025.

Graduated brackets with a 5.70% top rate (2024) → 3.8% flat

Iowa Department of Revenue — IDR Announces 2025 Individual Income Tax Brackets and Interest Rates

Idaho created the refundable Parental Choice Tax Credit for tax year 2025, worth up to $5,000 per eligible student and up to $7,500 for a student with special needs, for qualified K-12 education expenses.

No such credit → Refundable credit up to $5,000 per student ($7,500 for special needs students)

Idaho Legislature — Statement of Purpose / Fiscal Note, H0093 (2025)

Idaho broadened its income tax exemption for U.S. military pension income for tax year 2025 to cover certain disabled veterans under 62, all veterans aged 62 to 64, and certain employed non-disabled veterans under 62.

Narrower military pension exemption → Exemption extended to additional categories of veterans

Idaho Legislature — Statement of Purpose / Fiscal Note, H0040 (2025)

Idaho cut its flat individual income tax rate from 5.695% to 5.3%, retroactive to January 1, 2025.

5.695% flat → 5.3% flat

Idaho Legislature — Statement of Purpose / Fiscal Note, H0040 (2025)

Indiana's flat individual adjusted gross income tax rate fell from 3.05% to 3.00% for tax year 2025 under the staged reduction enacted in 2023.

3.05% flat (2024) → 3.00% flat

Indiana Department of Revenue — Legislative Synopsis 2023

Kansas raised the additional personal exemption for 100% disabled veterans from $2,250 to $2,320 for tax year 2025 and created a new $2,320 exemption for a dependent born, including stillborn, during the taxable year.

$2,250 additional disabled-veteran exemption; no exemption for a child born during the year → $2,320 additional disabled-veteran exemption; new $2,320 exemption for a child born or stillborn during the year

Kansas Department of Revenue — Notice 25-07, Changes To Individual Income Tax Personal Exemptions

Louisiana nearly tripled its individual standard deduction for tax year 2025, from $4,500 to $12,500 for single and married filing separately filers and from $9,000 to $25,000 for joint, head of household and surviving spouse filers, with CPI-U indexing from January 1, 2026.

$4,500 single/MFS; $9,000 MFJ/HOH/QSS → $12,500 single/MFS; $25,000 MFJ/HOH/QSS, indexed from 2026

Louisiana Department of Revenue — Revenue Information Bulletin No. 25-012: Louisiana Individual Income Tax Reform

Louisiana repealed its three graduated individual income tax brackets (1.85%, 3.50% and 4.25%) and replaced them with a single flat 3% rate on all taxable income beginning in tax year 2025.

Graduated 1.85% / 3.50% / 4.25% → 3% flat on all taxable income

Louisiana Department of Revenue — Revenue Information Bulletin No. 25-012: Louisiana Individual Income Tax Reform

Maryland added two new top individual income tax brackets for tax year 2025: 6.25% on taxable income of $500,001-$1,000,000 ($600,001-$1,200,000 joint) and 6.5% above $1,000,000 ($1,200,000 joint), capping the former 5.75% top bracket.

Top rate 5.75% on taxable income over $250,000 ($300,000 joint) → 5.75% to $500,000; 6.25% to $1,000,000; 6.5% above $1,000,000 (single)

Comptroller of Maryland — Tax Updates from the 2025 Legislative Session (webinar presentation)

Maryland imposed a new 2% surtax on net capital gain included in Maryland adjusted gross income for taxpayers with federal adjusted gross income above $350,000, beginning in tax year 2025, with exclusions for a primary residence sold for under $1.5 million and for retirement-account assets.

No capital gains surtax; capital gains taxed as ordinary income → 2% surtax on net capital gain when federal AGI exceeds $350,000

Comptroller of Maryland — Tax Updates from the 2025 Legislative Session (webinar presentation)

Maryland replaced its percentage-of-income standard deduction with flat amounts of $3,350 (single, married filing separately, dependent) and $6,700 (married filing jointly, head of household, qualifying surviving spouse) for tax year 2025, indexed for inflation thereafter.

15% of Maryland AGI, subject to a floor and cap that varied by income → $3,350 single/MFS/dependent; $6,700 MFJ/HOH/QSS, regardless of income

Comptroller of Maryland — Tax Updates from the 2025 Legislative Session (webinar presentation)

Maryland began phasing out itemized deductions in tax year 2025, reducing them by 7.5% of federal adjusted gross income above $200,000 ($100,000 for married filing separately).

No income-based phase-out of Maryland itemized deductions → Itemized deductions reduced by 7.5% of federal AGI over $200,000 ($100,000 MFS)

Comptroller of Maryland — Tax Updates from the 2025 Legislative Session (webinar presentation)

Maine requires non-corporate taxpayers to add back the federal gain exclusion on qualified small business stock first acquired after July 4, 2025, denying the new federal QSBS exclusion for Maine purposes.

Maine followed the federal qualified small business stock exclusion → Addback equal to the IRC 1202(a)(1) exclusion for stock first acquired after July 4, 2025

Maine Revenue Services — 2026 Session Legislation Enacted (Legislative Change Summary)

Michigan decoupled its income tax base from several federal One Big Beautiful Bill Act provisions for tax years beginning after December 31, 2024, requiring taxpayers to apply the pre-2025 versions of IRC sections 163(j), 168(k), 174 and 179 for Michigan purposes.

Michigan taxable income followed the current Internal Revenue Code, including new federal expensing and depreciation rules → Michigan taxable income computed under the pre-P.L. 119-21 versions of IRC 163(j), 168(k), 174 and 179

Michigan Legislature, Senate Fiscal Agency — Income Tax Act; Modify - H.B. 4961: Summary as Enacted

Minnesota added an advance payment option to its refundable Child Tax Credit starting in tax year 2025, letting families who claimed the 2024 credit receive part of their 2025 credit before filing.

Credit claimable only when the return was filed → Optional advance payment of part of the 2025 credit

Minnesota Department of Revenue — 2024 Tax Law Changes

Missouri allows individuals to subtract 100% of income reported as capital gains for federal purposes when computing Missouri adjusted gross income, effective for tax years beginning on or after January 1, 2025.

Capital gains fully included in Missouri adjusted gross income → 100% subtraction for individual capital gains

Missouri Department of Revenue — What's New? - Individual Income Tax Year Changes

Mississippi's individual income tax rate on taxable income above $10,000 fell from 4.7% to 4.4% for tax year 2025 under the 2022 phase-down schedule; the first $10,000 remains untaxed.

4.7% on taxable income over $10,000 (2024) → 4.4% on taxable income over $10,000

Mississippi Legislature — House Bill 531 (As Sent to Governor), 2022 Regular Session

North Carolina's flat individual income tax rate fell from 4.50% to 4.25% for taxable years beginning in 2025 under the statutory phase-down.

4.50% flat → 4.25% flat

North Carolina Department of Revenue — Tax Rate Schedules

North Dakota created a child care contribution income tax credit for qualified employers, equal to 50% of child care contributions made for qualifying employees and capped at $500 per employee, for taxable years beginning after December 31, 2024.

No such credit → Credit of 50% of child care contributions, capped at $500 per qualifying employee

North Dakota Legislative Assembly — Senate Bill 2282 Bill File, 69th Legislative Assembly (2025)

Nebraska's top individual income tax rate fell from 5.84% to 5.20% for taxable years beginning on or after January 1, 2025.

5.84% top rate (2024) → 5.20% top rate

Nebraska Legislature — Nebraska Revised Statute 77-2715.03

New Hampshire's 3% Interest and Dividends Tax was repealed effective January 1, 2025, leaving the state with no tax on individual income of any kind.

3% tax on interest and dividend income above $2,400 ($4,800 joint) → Repealed; no individual income tax

New Hampshire General Court — RSA Chapter 77, Taxation of Incomes (Revised Statutes Online)

New Mexico restructured its personal income tax for tax year 2025 into a six-bracket schedule with new 1.5%, 3.2% and 4.3% rates below the existing 4.7%, 4.9% and 5.9% rates, concentrating the cut on low and middle incomes.

Four brackets ranging from 1.7% to 5.9% → Six brackets: 1.5%, 3.2%, 4.3%, 4.7%, 4.9% and 5.9%

New Mexico Legislature, Legislative Finance Committee — Fiscal Impact Report - House Bill 252, Adjust Income Tax Brackets

New Mexico raised its capital gains deduction cap from the greater of $1,000 or 40% of net capital gain to the greater of $2,500 or 40%, and added a separate 40% deduction on up to $1,000,000 of gain from the sale of a New Mexico business, effective tax year 2025.

Greater of $1,000 or 40% of net capital gain income → Greater of $2,500 or 40%; plus 40% of up to $1,000,000 of gain on the sale of a New Mexico business

New Mexico Legislature, Legislative Finance Committee — Fiscal Impact Report - House Bill 252, Adjust Income Tax Brackets

New York replaced the Empire State child credit formula for tax year 2025 with $1,000 per qualifying child aged three or younger plus $330 per qualifying child aged four to sixteen, in place of the greater of $100 per child or 33% of the federal child tax credit.

Greater of $100 per qualifying child or 33% of the federal child tax credit → $1,000 per child aged 3 or younger; $330 per child aged 4-16

New York State Senate — S3009C, FY2026 Revenue Budget Bill (enacted as ch. 59, Laws of 2025)

Ohio's top individual income tax rate fell from 3.50% to 3.125% for taxable years beginning in 2025, leaving a two-rate schedule of 2.75% and 3.125% on nonbusiness income above $26,050.

$360.69 + 2.75% over $26,050; 3.50% over $100,000 (2024) → $342 + 2.75% over $26,050; 3.125% over $100,000 (2025)

Ohio Laws and Administrative Rules — Ohio Revised Code Section 5747.02 | Tax rates

South Carolina's top marginal individual income tax rate fell from 6.2% to 6% for tax year 2025, accelerating the phase-down from the former 7% top rate.

6.2% top rate (2024) → 6% top rate

South Carolina Department of Revenue — Individual Income Tax

Utah cut its flat individual income tax rate from 4.55% to 4.5% effective January 1, 2025.

4.55% flat (2024) → 4.5% flat

Utah State Tax Commission — Income Tax Rate

Virginia's refundable earned income tax credit increased from 15% to 20% of the federal earned income tax credit beginning with tax year 2025.

15% of the federal EITC → 20% of the federal EITC

Virginia Department of Taxation — New Virginia Tax Laws for July 1, 2025

Virginia's standard deduction increased for tax year 2025 from $8,500 to $8,750 for single filers and from $17,000 to $17,500 for married couples filing jointly.

$8,500 single; $17,000 married filing jointly → $8,750 single; $17,500 married filing jointly

Virginia Department of Taxation — New Virginia Tax Laws for July 1, 2025

Virginia's 2026 conformity legislation raised the state and local tax deduction cap on Virginia Schedule A for tax year 2025 from $10,000 to $40,000 ($20,000 married filing separately), phasing down for modified adjusted gross income above $500,000 joint / $250,000 single.

$10,000 SALT cap ($5,000 married filing separately) → $40,000 ($20,000 MFS), phasing down above $500,000 MAGI joint / $250,000 single

Virginia Department of Taxation — Important Update for Taxpayers Who Itemize Deductions on Tax Year 2025 Returns

Vermont raised the qualifying age for its Child Tax Credit from five to six years old and increased the earned income tax credit for filers without qualifying children from 38% to 100% of the federal credit, and created a new $250 refundable Veteran Tax Credit, all for tax year 2025.

Child Tax Credit for children five and under; childless EITC at 38% of the federal credit; no veteran credit → Child Tax Credit for children six and under; childless EITC at 100% of the federal credit; new $250 refundable Veteran Tax Credit

Vermont Department of Taxes — 2025 Legislative Highlights

Vermont raised each adjusted gross income threshold for its Social Security and civil service retirement income exemptions by $5,000 for tax year 2025 and broadened eligibility for the military retirement and survivor benefit exemption, which phases out between $125,000 and $175,000 of AGI.

Pre-2025 AGI thresholds for the Social Security and CSRS exemptions; narrower military retirement exemption → Each AGI threshold raised by $5,000; military retirement and survivor benefit exemption expanded

Vermont Department of Taxes — 2025 Legislative Highlights

Washington added a second tier to its long-term capital gains excise tax beginning January 1, 2025: an additional 2.90% on Washington capital gains above $1,000,000, on top of the existing 7% rate.

Flat 7% excise tax on Washington long-term capital gains above the standard deduction → 7%, plus an additional 2.90% (9.9% combined) on gains above $1,000,000

Washington State Legislature — Engrossed Substitute Senate Bill 5813 (2025)

Wisconsin widened its second income tax bracket for tax year 2025 so that the 4.40% rate now runs to $50,480 for single filers (up from $28,640) and to $67,300 for joint filers (up from $38,190) before the 5.30% rate applies; the four rates themselves are unchanged.

Single: 4.40% from $14,320 to $28,640. Joint: 4.40% from $19,090 to $38,190 (2024) → Single: 4.40% from $14,680 to $50,480. Joint: 4.40% from $19,580 to $67,300

Wisconsin State Legislature — 2025 Wisconsin Act 15 (enrolled bill text)

Wisconsin created a retirement income subtraction for tax year 2025 of up to $24,000 of qualified retirement and IRA income for taxpayers aged 67 or older ($48,000 for joint filers where both spouses qualify); claimants forgo all other Wisconsin income tax credits for that year.

No general retirement income subtraction beyond the narrow $5,000 subtraction for age 65+ with low federal AGI → Up to $24,000 single / $48,000 joint of qualified retirement income for those aged 67+

Wisconsin Department of Revenue — Publication 106, Wisconsin Tax Information for Retirees

West Virginia's phase-out of income tax on Social Security benefits advanced to a 65% decreasing modification for tax year 2025, up from 35% in 2024.

35% decreasing modification (2024) → 65% decreasing modification (2025)

West Virginia Tax Division — Social Security Modification

West Virginia cut all personal income tax rates for tax year 2025, dropping the top marginal rate from 5.12% to 4.82%.

2.36%-5.12% bracket range (2024) → 2.22%-4.82% bracket range (2025)

West Virginia Tax Division — 2025 Personal Income Tax Rate Schedules (IT-140)