States With a Flat Income Tax Rate
Tax concepts are rarely black and white, and specific rules can differ among the states that have adopted a flat tax system. For the 2022 tax year (the taxes you file in 2023, state individual income taxes for flat tax states are shown in the map below. Hover over each one for for more information.
Colorado Income Tax Rate: 4.55%
Colorado uses the same personal exemption and standard deduction amounts that the Internal Revenue Service (IRS) lays out for federal income taxes. There are no personal exemptions in Colorado.
Illinois Income Tax Rate: 4.95%
The personal exemption allowed for individuals is $2,425 per person, $4,850 for married couples filing jointly, and $2,425 for dependents. There is no state standard deduction in Illinois.
Indiana Income Tax Rate: 3.23%
Personal exemptions are $1,000 if you’re a single taxpayer, up to $2,500 for each of your dependents, and $2,000 for married couples who file jointly. There is no state standard deduction in Indiana.
Kentucky Income Tax Rate: 5.0%
The standard deduction for individuals who are single or married filing jointly in Kentucky is $2,770, and there are no personal exemptions.
Massachusetts Income Tax Rate: 5.0%
There is no standard deduction, but personal exemptions are somewhat generous in Massachusetts at $4,400 for single taxpayers and $8,800 for married taxpayers filing joint returns. There is also a $1,000 exemption for dependents.
Michigan Income Tax Rate: 4.25%
There’s no standard deduction in Michigan, but personal exemptions are $5,000 for both single taxpayers and dependents, and $10,000 for married taxpayers who file jointly.
North Carolina Income Tax Rate: 4.99%
In 2021, North Carolina enacted sweeping tax reform that would bring down its flat tax rate and align state standard deductions with those at the federal level for 2022. Prior to this, the state enacted income tax reform in 2014 that brought down tax rates, eliminated the earned income tax credit and personal exemptions at the same time. Deductions for medical expenses, retirement contributions, child care, and college 529 plans were also eliminated.
Pennsylvania Income Tax Rate: 3.07%
This rate is the lowest among flat tax states in the U.S. Pennsylvania law does not recognize personal exemptions or standard deductions for individuals or dependents.
Utah Income Tax Rate: 4.85%
Although Utah does not technically have a standard deduction, it does offer a nonrefundable taxpayer tax credit equal to 6% of your federal deduction, and it also allows a personal exemption of $1,750 per dependent that you were allowed to claim on your federal tax credit. The taxpayer credit begins to phase out at $15,095 for single people and married couples filing separately, and $30,190 for married couples filing jointly.
Support and Criticism for a Flat Tax System
Supporters of a flat tax system argue that it encourages wealth accumulation because top earners aren’t punished with higher tax rates. Since everyone pays the same rate, the system is far simpler than the progressive tax system in place in most states. Opponents of the flat tax system argue that it places an unfair burden on low-income earners—the people with the lowest income pay the same tax rate as the people with the highest income in the state. Giving up 5% of $100,000 in income leaves plenty of money for housing, food, and recreation, but 5% of $30,000 might threaten an individual’s ability to afford necessities like food and shelter.
