Forty-three states will ring in 2026 with notable tax changes. Eight states will see reduced individual income tax rates in the new year, and one of them (Ohio) will transition to a single-rate income tax. Four states will see reduced corporate income tax rates. Generally, state tax changes take effect either at the start of the calendar year (January 1) or at the start of the fiscal year (July 1 for most states), with rate changes for major taxes typically implemented effective January 1—either prospectively, as in these cases, or retroactively, as may happen under legislation enacted in the new year.As we head into 2026, tax competition across the states is evident. Another year has brought a further wave of pro-growth tax reforms. Many of the tax changes effective as of January 1, 2026, demonstrate that states continue to embrace reforms that will give them a competitive edge and promote continued economic growth for years to come.
