Three states in the Midwest have a flat income-tax rate: In 2007, Illinois’ rate was 3 percent, and Indiana and Michigan had rates of 3.4 percent and 3.9 percent, respectively. The most common structure among U.S. states is the graduated income tax, which collects revenue based on varying income brackets. Below are tax rates and income brackets in the Midwest:
• Iowa: 0.36 percent to 8.98 percent, with nine income brackets ranging from $1,343 to $60,436;
• Kansas: 3.5 percent to 6.45 percent, with three brackets ranging from $15,000 to $30,000 for individuals;
• Minnesota: 5.35 percent to 7.85 percent, with three brackets ranging from $21,310 to $69,991 for individuals;
• Nebraska: 2.56 percent to 6.84 percent, with four brackets ranging from $2,400 to $27,001 for individuals;
• North Dakota: 2.1 percent to 5.54 percent, with five brackets ranging from $30,650 to $336,550 for individuals;
• Ohio: 0.712 percent to 7.185 percent, with nine brackets ranging from $5,000 to $200,000;
• Wisconsin: 4.6 percent to 6.75 percent, with four brackets ranging from $9,160 to $137,411 for individuals.
South Dakota is the only Midwestern state that does not have a personal income tax. Iowa is the only state in this region that allows taxpayers to deduct federal income taxes on their state returns. Iowa, Michigan, Minnesota, Nebraska, North Dakota, Ohio and Wisconsin are among the U.S. states whose laws require tax brackets, exemptions or deductions to be automatically adjusted based on inflation.
Information came from CSG’s Book of the States,
using data from the Federation of Tax Administrators and other
sources.
