PolicyEngine's state income tax model updated for tax year 2025

This update ensures that our microsimulation models accurately reflect the latest tax parameters and policy changes across all 50 states, including New York City and the District of Columbia.

State income tax systems vary significantly across the United States. Some states like California and New York have progressive rate structures with multiple brackets, while others like Texas and Florida have no state income tax at all. Each year, many states adjust their tax parameters for inflation or enact new legislation that changes tax rates, deductions, credits, and other income tax programs.

For tax year 2025, updates include:

• Income tax brackets and rates - Updated thresholds for states with graduated income tax systems
• Standard deductions - Adjusted values for states that offer standard deductions
• Personal exemptions - Updated exemption amounts where applicable
• State-specific credits - Earned Income Tax Credits (EITCs), Child Tax Credits (CTCs), and other refundable and nonrefundable credits
• Filing thresholds - Updated income levels that trigger filing requirements

among other provisions.

Accurate state income tax modeling is essential for:

1. Household calculations - Users can see precisely how much they owe in state income taxes based on current law
2. Policy analysis - Researchers and policymakers can evaluate proposed reforms against the correct baseline
3. Cross-state comparisons - Compare tax burdens across different states with confidence

You can explore the updated state income tax parameters in PolicyEngine by visiting policyengine.org/us using our report builder. Users can see how the new updates affect specific households across all U.S. states and build custom reforms to compare against the updated baseline.

All state income tax parameters are maintained in the policyengine-us repository. Each state's parameters are organized by tax year, allowing for accurate historical analysis as well as current-year calculations.

We welcome contributions and feedback from the community. If you notice any discrepancies or have suggestions for improvements, please open an issue on our GitHub repository or contact us at hello@policyengine.org.