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By Emma Marsden
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Voters in five U.S. states approved significant changes to income tax policy in the November 3 midterm elections, backing higher taxes on wealthy residents in some states while restricting the ability of lawmakers to raise taxes in others.
Colorado and California voted to increase or preserve higher rates on top earners, while Washington voters rejected an attempt to repeal a new tax on millionaires. North Carolina and Iowa, meanwhile, approved measures making future income tax increases more difficult.
The results highlight contrasting approaches to taxation, with implications for taxpayers, state budgets and public services.
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Newsweek contacted the Institute on Taxation and Economic Policy (ITEP) via email on Sunday for comment.
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Colorado: Voters Approve Graduated Income Tax System
Colorado voters approved Amendment 87, replacing the state's flat 4.4 percent income tax rate with six graduated rates ranging from 3.7 percent to 8.4 percent, starting with the 2027 tax year.
The highest rate will apply to taxable income above $1 million, while taxpayers earning between $500,001 and $750,000 will face a 7.4 percent rate. Those earning between $750,001 and $1 million will pay 7.9 percent.
According to the state's fiscal analysis, taxpayers with Colorado taxable income below $510,834 are expected to see their tax bills decrease, while those above that threshold are expected to pay more.
The change is projected to generate nearly $2 billion in additional revenue in its first full fiscal year, 2027-28. The money will support public education, health care and early childhood programs.
California: Higher Taxes on Wealthy Residents Made Permanent
California voters approved Proposition 3, making permanent higher income tax rates on the state's highest earners that were due to expire in 2031.
The additional rates, originally approved in 2012 and extended in 2016, affect approximately the top 2 percent of California taxpayers.
The higher rates apply to income above approximately $371,000 for single filers, $742,000 for married couples filing jointly and $505,000 for heads of household. The thresholds are adjusted annually for inflation.
The proposition does not introduce a new tax rate. Instead, it prevents existing higher rates from expiring.
Of the revenue allocated to education, 89 percent will go to K-12 public schools and 11 percent to community colleges. The state's Legislative Analyst's Office estimated that making the rates permanent would preserve between $5 billion and $15 billion in annual state revenue, with roughly 40 percent supporting schools and community colleges and the remainder going to other state programs and budget reserves.
Washington: Voters Reject Effort to Repeal Millionaires Tax
Washington voters rejected Initiative 645, turning down an attempt to repeal the state's new 9.9 percent income tax on annual income above $1 million.
The tax, approved by the state legislature earlier this year, applies to individuals and married couples filing jointly whose annual adjusted gross income exceeds the threshold.
It is scheduled to take effect on January 1, 2028, with the first tax returns due in 2029. The 9.9 percent rate applies to state taxable income above $1 million, not a taxpayer's entire earnings.
Revenue will support public services, including K-12 education, health care and higher education, as well as the Working Families Tax Credit. Five percent of collections will also be directed to the state's Fair Start for Kids account.
Initiative 645 would have repealed the tax and prohibited future state and local taxes on individual income. Its defeat allows the new levy to proceed.
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North Carolina: Income Tax Ceiling Cut to 3.5 Percent
North Carolina voters approved a constitutional amendment reducing the maximum state income tax rate permitted under the state constitution from 7 percent to 3.5 percent.
The change applies to individual and corporate income taxes and takes effect upon certification of the results, applying to taxable years beginning on or after January 1, 2027.
The amendment does not immediately cut the existing individual income tax rate, which is 3.99 percent in 2026 and is scheduled to fall to 3.49 percent in 2027. Instead, it caps the rate at 3.5 percent, limiting lawmakers' ability to increase it without another constitutional amendment.
Supporters said the amendment would protect taxpayers against future increases. However, it also restricts the legislature's ability to raise additional income tax revenue to fund public services.
Iowa: Two-Thirds Majority Required for Tax Increases
Iowa voters approved Amendment 1, requiring a two-thirds majority in both legislative chambers to increase individual or corporate income tax rates or establish a new state income tax. Previously, such measures required only a simple majority.
Under the new rules, at least 67 members of the 100-seat House of Representatives and 34 members of the 50-seat Senate must vote in favor of an increase.
The amendment does not immediately change tax rates or give taxpayers a reduction. Instead, it makes future increases more difficult to approve.
The requirement also covers other state taxes based on income or legal and special reserves, although taxes imposed at the option of local governments are excluded.
Supporters say the change protects taxpayers from future tax increases. Opponents have warned it could limit the state's ability to respond to budget pressures.
Although some changes across these five states will not immediately affect tax bills, the decisions will shape how they raise revenue and finance public services in the years ahead.
Contact Newsweek editors on this story: Ben Kelly and Cristina Diciu.
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