Tennessee — falling
When compared to the states we’ve listed in this article, Tennessee will probably see the biggest tax change. In 2021, Tennessee will forget about levying any personal income tax.
So, the tax known as “HALL TAX” (which was a tax that involved interest and dividend income) will remain history as of 2021. This actually means that Tennessee will be one of the eight states that will no longer levy taxes on income, no matter the type.
The other seven are Alaska, Nevada, Texas, Florida, South Dakota, Wyoming, and Washington.
Iowa — falling
Iowa’s law regarding passing-through business income continues to phase this year too.
According to the Tax Foundation, the state complied with the federal pass-through business income deduction made as part of the Tax Cuts and Jobs Act. However, as for 2019 and 2020, the state wanted to offer (and did so) a deduction that equals 25 percent of the federal deduction.
This year, Iowa has phased up the amount to 50 percent and is planning to increase it to 75 percent for next year.
Psst! Are you in the middle class? Here Are the Most Tax-Friendly States!
