Flat tax means everyone pays the same percentage, whether you earn $30,000 or $300,000. No brackets, no complexity. Just one simple rate. In 2025, 14 US states have adopted this system—and three more just joined the movement.
✨ Why Flat Tax is Great
- Dead simple: Multiply your income by one number. Done.
- Predictable: Know exactly what you'll pay before the year starts
- Fast filing: No calculating brackets, no worksheets
- Fair (arguably): Everyone pays the same rate
- Business-friendly: Easy to plan cash flow
Complete List: 14 Flat Tax States (2025)
| State | Flat Tax Rate | Tax on $50k | Tax on $75k | Tax on $100k | Status |
|---|---|---|---|---|---|
| Arizona | 2.5% | $1,250 | $1,875 | $2,500 | Lowest! |
| Colorado | 4.4% | $2,200 | $3,300 | $4,400 | — |
| Georgia NEW 2025 | 5.19% | $2,595 | $3,893 | $5,190 | Was progressive |
| Idaho | 5.3% | $2,650 | $3,975 | $5,300 | — |
| Illinois | 4.95% | $2,475 | $3,713 | $4,950 | — |
| Indiana | 3.0% | $1,500 | $2,250 | $3,000 | Very low! |
| Iowa NEW 2025 | 3.8% | $1,900 | $2,850 | $3,800 | Was 9 brackets! |
| Kentucky | 4.0% | $2,000 | $3,000 | $4,000 | 3.5% in 2026 |
| Louisiana NEW 2025 | 3.0% | $1,500 | $2,250 | $3,000 | Was progressive |
| Massachusetts | 5.0%* | $2,500 | $3,750 | $5,000 | +4% over $1M |
| Michigan | 4.25% | $2,125 | $3,188 | $4,250 | — |
| Mississippi | 4.4%** | $1,760 | $2,860 | $3,960 | Over $10k |
| North Carolina | 4.25% | $2,125 | $3,188 | $4,250 | — |
| Pennsylvania | 3.07% | $1,535 | $2,303 | $3,070 | Very low! |
| Utah | 4.5% | $2,250 | $3,375 | $4,500 | — |
*Massachusetts adds a 4% surtax on income over $1 million (total 9%).
**Mississippi exempts the first $10,000 of income, then applies 4.4% to everything above.
🎉 The 2025 Tax Revolution: 3 States Go Flat
Georgia: From 6 Brackets to 5.19% Flat (HB 111)
What changed: Georgia eliminated its progressive 6-bracket system (1.85% to 5.75%) and replaced it with a flat 5.19% for 2025.
Why: Major tax reform aimed at simplification and competitiveness. Rate will drop further to 4.99% by 2027.
Who wins: High earners ($150k+) save money. Middle-income ($50k-$100k) pay slightly more but gain simplicity.
Iowa: From 9 Brackets to 3.8% Flat (SF 2442)
What changed: Iowa had a complex 9-bracket progressive system with a 5.7% top rate. Now everyone pays 3.8% flat.
Why: Enacted May 2024 as part of sweeping tax reform. One of the most dramatic simplifications in US history.
Who wins: Almost everyone saves money, especially middle and upper-middle class ($60k-$150k).
Savings example: Someone earning $75k saves ~$800/year vs the old system!
Louisiana: From 3 Brackets to 3.0% Flat
What changed: Louisiana ditched its 3-bracket progressive system (1.85%, 3.5%, 4.25%) for a simple 3% flat tax.
Why: Make Louisiana more competitive with Texas and Florida for business relocation.
Who wins: High earners ($100k+) see biggest savings. Low earners ($30k-$50k) pay slightly more but gain simplicity.
đź’ˇ The Flat Tax Trend
This is a movement. More states are considering flat tax legislation:
- West Virginia: Discussing phased transition to flat tax by 2027
- Missouri: Proposed 4.5% flat tax bill pending
- Montana: Already simplified to just 2 brackets, may go flat
Why? Flat tax states are winning the migration war. Families and businesses are moving to simpler, more predictable tax environments.
Flat Tax vs Progressive Tax: The Debate
âś… Advantages of Flat Tax
- Simplicity: Anyone can calculate their tax liability in 30 seconds
- Predictability: Get a raise? You know exactly how much tax you'll pay on it
- Fast filing: No worksheets, no bracket calculations, no mistakes
- Economic growth: Studies show flat tax states attract more businesses
- Fairness (one view): Everyone contributes the same percentage—seems fair
❌ Disadvantages of Flat Tax
- Regressive impact: $1,500 tax on $30k income hurts more than $15,000 on $300k
- Less revenue: States often lose tax revenue (offset by spending cuts or other taxes)
- Burden shifts down: Middle class may pay more while wealthy pay less
- Fairness (other view): Those who can afford more should pay higher rates
The reality: Both systems have merit. Flat tax is mathematically simpler; progressive tax is arguably more equitable. Your preference depends on your values and income level.
Best Flat Tax States for Middle-Class Earners
🏆 Top 5 for Families Making $60k-$100k
1. Indiana (3.0% flat)
- Lowest flat tax rate after Arizona
- Reasonable cost of living
- $75k income = only $2,250 state tax
- Calculate →
2. Louisiana (3.0% flat) 🆕
- Tied for lowest with Indiana
- No state property tax on food
- New in 2025—still adjusting but promising
- Calculate →
3. Pennsylvania (3.07% flat)
- Almost as low as Indiana/Louisiana
- Constitutional protection (can't easily change)
- Major cities (Philly, Pittsburgh) with job opportunities
- Calculate →
4. Iowa (3.8% flat) 🆕
- Brand new flat tax, huge tax cut for most residents
- Low cost of living
- Family-friendly, good schools
- Calculate →
5. Kentucky (4.0% flat, going to 3.5%!)
- Scheduled to drop to 3.5% in 2026
- Affordable housing
- Growing cities (Louisville, Lexington)
- Calculate →
How Much Would YOU Pay in Each Flat Tax State?
Quick Reference: Tax on $75,000 Income
| State | Rate | Annual Tax | Monthly Impact | vs California |
|---|---|---|---|---|
| Arizona | 2.5% | $1,875 | $156/mo | Save $1,025 |
| Indiana | 3.0% | $2,250 | $188/mo | Save $650 |
| Louisiana 🆕 | 3.0% | $2,250 | $188/mo | Save $650 |
| Pennsylvania | 3.07% | $2,303 | $192/mo | Save $597 |
| Iowa 🆕 | 3.8% | $2,850 | $238/mo | Save $50 |
| Kentucky | 4.0% | $3,000 | $250/mo | Comparable |
| California (for comparison) | Progressive | $2,900 | $242/mo | — |
Key insight: For a middle-class earner at $75k, flat tax states like Indiana, Louisiana, and Pennsylvania save you $600-$1,000+ per year compared to California. That's a car payment, vacation fund, or extra retirement savings!
Flat Tax vs No Tax: Which is Better?
Nine states have no income tax at all. How does flat tax compare?
The Math: $75k Income
No-tax states (TX, FL, NV, WA, etc):
- State income tax: $0
- But: Higher sales tax, property tax, or fees
- Total tax burden varies
Low flat-tax states (IN, LA, PA at 3%):
- State income tax: $2,250
- But: Often lower property or sales tax
- Net difference may be smaller than you think
Example: Texas has no income tax but property taxes average 1.6% of home value. Own a $250k home = $4,000/year in property tax. In Indiana, you'd pay $2,250 income tax but only 0.81% property tax ($2,025/year). Indiana is actually cheaper!
See our complete guide: 9 States with No Income Tax
Will More States Go Flat?
Probably yes. Here's why:
- Migration patterns: People are moving to low-tax states. Progressive tax states are losing population.
- Business relocation: Companies prefer simple, predictable tax environments.
- Political pressure: Taxpayers want simplicity. Filing taxes is America's most hated chore.
- Success stories: Georgia and Iowa's transitions have been smooth, encouraging other states.
- Revenue stability: Flat taxes provide stable, predictable revenue (no surprises from stock market volatility affecting high earners).
Watch these states: West Virginia, Missouri, Montana, South Carolina—all considering flat tax proposals.
Frequently Asked Questions
Is flat tax actually fairer than progressive tax?
Depends on your definition of "fair." Flat tax proponents say everyone paying the same rate is fair. Progressive tax advocates say those with more should contribute a higher percentage. Both are defensible positions. Economically, flat taxes tend to be more efficient; ethically, it's a values question.
Do I still need to file a tax return in flat tax states?
Yes, but it's much simpler. You still file to report your income, claim deductions, and calculate what you owe. But with flat tax, you skip the complicated bracket worksheets. Most people can do their state return in 15 minutes.
What's the difference between flat tax and no tax?
Flat tax = one rate applied to all income (e.g., Indiana's 3%). No tax = 0% on income (e.g., Texas). No-tax states must fund services through sales, property, or other taxes. Flat tax states use income tax but keep it simple.
Are flat tax states trying to become no-tax states?
Not usually. Most flat tax states see their income tax as necessary revenue. However, some are gradually lowering rates—Kentucky is going from 4% to 3.5%, Idaho dropped from 5.695% to 5.3%. The trend is down, but full elimination is rare.
Take Action: Find Your Best Flat Tax State
Ready to compare flat tax states? Use our calculator to see your exact tax in all 14 flat tax states:
Calculate Your Tax in Any State →
Related Resources
- 2025 State Tax Reforms - See all the changes this year
- States with No Income Tax - Go even simpler
- Lowest Tax States 2025 - Find the cheapest options
- Highest Tax States - See what you're avoiding
- Iowa Tax Calculator - Try the new flat tax