Flat tax
A tax system that applies a single rate to all income — used by 11 US states and a handful of European countries.
A flat tax applies one rate to every dollar of taxable income, in contrast to a progressive tax which steps up through brackets. Eleven US states currently levy flat income-tax rates: Illinois (4.95%), Indiana (3.0%), Kentucky (4.0%), Michigan (4.25%), and others. Illinois is the largest flat-tax state and is one of the five US states this calculator currently models.
Flat-rate systems are simpler to administer but criticised as regressive in net effect because low earners pay the same proportion as high earners. Progressive systems push higher earners into higher brackets, raising their effective rate. Most European national income taxes are progressive; only a few smaller countries (Estonia, Latvia, Bulgaria) use flat national rates.
Flat state income tax in the US sits ON TOP of progressive federal income tax + FICA, so the overall combined system is still mildly progressive even in flat-tax states.
Calculator pages that use this term
See also
- Progressive tax — A tax system in which marginal rates rise as income increases — used for national income tax in every country on this site except some US states.
- Standard deduction (US federal) — The flat amount subtracted from gross income before federal-income-tax brackets apply — $15,000 single (2025).
- FICA (Social Security + Medicare) — The US payroll tax that funds Social Security and Medicare — flat-rate, applies before federal income tax.