Not everyone needs to file 2025 state taxes but most do. What to know.

Medora Lee, USA TODAY

Wed, February 11, 2026 at 7:11 PM GMT+9

Americans generally fear the IRS enough to make sure they file their federal taxes, but most of them must also remember to pay state taxes.

There are exceptions. Taxpayers who live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming don’t need to worry – because those states don’t levy a personal income tax. Everyone else does.

Despite that, there is a bit of relief. Nine states cut their income tax rates for 2025, according to nonprofit Tax Foundation, meaning you get to keep more of your money.

But more than usual, those filing state taxes must be careful because many states are not conforming to new federal provisions from President Donald Trump’s mega tax and spending bill signed into law on July 4.

Americans in nonconforming states may lose new tax breaks, like the additional senior deducton and no tax on overtime and tips that were retroactive to 2025, on their state returns. They may have to add back that income when calculating what they owe to their state.

Which states cut their income tax rate for 2025?

**Indiana**: lowered to 3% for tax year 2025 from 3.05% in 2024, and to 2.95% for tax year 2026.

**Iowa**: dropped to a flat rate of 3.8% from tiered brackets between 4.4% to a top rate of 5.7% in 2024.

**Louisana**: declined to a flat 3% from tiered rates between 1.85% and 4.25% in 2024.

**Mississippi**: flat rate cut to 4.4% on all income above $10,000 from 4.7% in 2024. It falls to 4.0% in 2026.

**Missouri**: top marginal rate cut to 4.7% from 4.8%.

**Nebraska**: top marginal rate decreased to 5.2% from 5.84%.

**New Mexico**: added new tax brackets and cut the lowest rate to 1.5% from 1.7%.

**North Carolina**: lowered the flat rate to 4.25% from 4.5%. It will drop to 3.99% in 2026.

**West Virginia**: tiered rates fell to between 2.22% to a top rate of 4.82% from between 2.36% and 5.12% for individuals in 2024.

Which states aren’t conforming to federal tax laws?

These states aren’t following all the new federal tax laws:

**California**: Doesn't recognize Trump accounts as tax-deferred retirement accounts. That means earnings are taxed annually to the child in California, growth isn't deferred until distribution and kiddie tax rules apply. Additionally, employer contributions are taxable income in California. Only the initial $1,000 given by the government to seed the account is excluded from income on state returns.

**Colorado:** Rejected no tax on overtime pay. It will add a line to its state tax form for “Excess federal deduction for overtime pay.” Taxpayers must report the amount deducted federally and add it back for state purposes.

**New York:** Will continue taxing tips and overtime pay by adding new codes for “Add-back of exempt tip income” and “Add-back of exempt overtime pay” on its IT-225 form.

**Illinois:** Hasn't adopted no tax on overtime and tips and will probably update Schedule M to require add-backs for federally exempt tip and overtime income.

**Maine**: Rejected the bonus senior deduction and deductions for car loan interest, tips and overtime.

 






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Note: Washington, DC’s city council passed an emergency bill late last year to decouple parts of its tax code from recent federal tax changes like the new senior deduction and no tax on tips. However, Congress is moving to overturn the change. The House passed the measure on Feb. 4, and it’s now with the Senate, which may vote as early as this week.

If the Senate passes the measure in the middle of tax season, DC Chief Financial Officer Glenn Lee warned in a letter to Congress that the District “would need to suspend the current filing season” to update tax forms and guidance, a process that would take months.

Who needs to file a state tax return?

If a state has an income tax, there are two scenarios in which you must file a return:

You’re a resident of the state

You’re not a resident of the state, but you earn income in that state. Examples of this include rental income from a second home, or a professional athlete or consultant who may work in different states. Every state in which you earn income will require you to file a tax return and pay taxes on the income earned there. You’ll also have to report that income in your home state return, but your home state usually allows you to take a credit for taxes paid to another state on the same income.

Do states perform tax audits?

Yes.

“States are similar to the IRS and have mechanisms to audit taxpayers,” said Ken Rios, tax principal at accounting and advisory firm Kaufman Rossin.

Since states have different rules, it’s important to know what they are in the state you’re filing in. Misreporting data, math mistakes, incomplete state tax forms, excessive deductions, and failing to file your state tax return at all or on time are common audit triggers, experts say.

A state audit works similarly to an IRS audit. Usually, states will contact you by mail notifying you of an audit and ask you for more information with instructions on how to proceed.

Does a state audit automatically mean an IRS audit?

Not necessarily, but it’s possible because your state’s tax department likely communicates with the IRS and some of the information on both returns is the same.

When are state taxes due?

Most states generally follow federal guidelines, which would be April 15. However, you should double-check with the state because they can differ for various reasons, such as disasters.

If your state doesn’t have an income tax, there is no deadline.

_Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.   _

This article originally appeared on USA TODAY: Most states require you to file taxes. Why they may be tricky for 2025

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