In a win for Missouri workers and families, voters overwhelmingly rejected a proposed amendment that would have allowed lawmakers to replace the state’s income tax with increased or expanded sales taxes. The measure, which laid bare the mismatch between tax policies people want to see and those that lawmakers there delivered, was soundly defeated with 83 percent of the vote against it. The response demonstrates that when the tradeoffs of eliminating income taxes are made clear, the public sees through the ruse. In other ballot news, Florida’s proposed constitutional amendment to phase-out property taxes faces an uphill battle as a rewrite of the ballot language, summary, and title have been ordered, and interest groups and advocates continue to announce opposition to the measure.
Outside of Florida, property taxes continue to dominate state tax debates, with conversations ongoing in Alaska, Delaware, and New York City where the new tax on second homes worth more than $5 million faces a lawsuit and appeal from the city.
Also, if you’re interested in ITEP, tax justice, and all things data and tax, consider coming to work for us. We’re hiring a new Senior Analyst on the State Team. You can apply here.
Major State Tax Proposals and Developments
- MISSOURI voters overwhelmingly rejected a proposed constitutional amendment to increase sales taxes in order to cut and eventually eliminate the income tax. A full swap would have cost a typical family up to $535 annually, but the proposal did not specify details of its sales tax hike, instead allowing the legislature to expand and hike the sales tax as they saw fit. The measure lost every county in a decisive rejection of leadership priorities and Gov. Mike Kehoe’s signature proposal. – ELI BYERLY-DUKE
- The FLORIDA Attorney General’s Office is in the process of finalizing new language for a proposed constitutional amendment to phase-out property taxes that will be on the ballot this fall after a judge ruled the original language was misleading and contained political rhetoric. A judge also ordered a rewrite of the summary and title language. In addition to legal obstacles, the ballot is facing opposition from an increasingly broad swath of the population: advocates for renters, social services organizations, and the Sheriffs Association. – NEVA BUTKUS
- SOUTH CAROLINA lawmakers sent their budget to Gov. Henry McMaster, six weeks into the new fiscal year. The budget includes a $309 million cut to personal income taxes and an increased homestead exemption for seniors from $50,000 to $75,000. The personal income tax cut includes triggers that could effectively eliminate South Carolina’s income tax over time. The budget includes no earmarked revenue for local commitments such as infrastructure and local government projects, as requested by lawmakers. – NEVA BUTKUS
State Roundup
- As ALASKA enters its third special session to address the Alaska LNG megaproject, Mike Dunleavy said that he will introduce a bill to provide a major property tax cut and include a compromise that would allow for a corporate income tax expansion. The compromise would create a 2 percent corporate income tax, smaller than the maximum 9.4 percent rate for C corporations, for oil and gas companies that are S corporations or limited liability companies, but that would not apply to the Alaska LNG project itself. Gov. Dunleavy originally proposed a $1 billion annual elimination of property taxes for the project.
- Lawmakers and school choice advocates in ARIZONA are appealing to the Arizona Supreme Court after a judge removed Prop. 145 from the ballot last month. The proposition, according to voucher proponents, protects voucher money for children in military families and bars the confiscation of unspent voucher money. But the proposition was thrown out on the grounds that it goes far beyond that goal and would prevent the confiscation of voucher dollars for all students which violates the state constitution’s “Separate Amendment Rule.”
- DELAWARE Matt Meyer is allowing a property tax bill to become law without his signature as he calls on lawmakers to do more to reform the state’s property tax system. The bill caps the nonresidential property tax rate to no more than 1.85 times the residential rate. Under Delaware’s current system, apartments and other residential properties are treated as commercial property. Gov. Meyer said he could not endorse legislation that continues this system and wants lawmakers to address reforms in the future.
- NEW YORK City’s new pied-à-terre tax on luxury second homes is being challenged in court by opponents who object to the way it was initially rolled out, which they say unduly puts the burden of proof on property owners to prove whether they owe the tax or not. The lawsuit briefly led to a pause of the rollout, but the city quickly appealed, and the tax is back on track for now. However, the lawsuit and appeal are still making their way through the courts.
- Revenues in WEST VIRGINIA were not high enough to trigger an automatic cut to the personal income tax in tax year 2027.
What We’re Reading
- Following the ballot loss in Missouri, other states across the country are taking note. For example, the Arizona Center for Economic Progress drew the clear parallel to public pressure to prevent tax breaks for data centers and oppose more tax cuts for the rich. Elsewhere, the North Carolina Budget & Tax Center connected the defeat to the similar public desires in North Carolina.
- In a new piece, The Pew Charitable Trusts shows that while state revenues showed signs of stabilization in 2025, total collections are below long-term trends.
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