A new ITEP analysis examines the extraordinary wave of state income tax cuts enacted since 2020 and how years of repeated, incremental rate reductions are adding up to much larger tax cuts for wealthy households than any single year’s legislation might suggest.
A few key findings:
- States have cut their top personal income tax rates 71 times so far this decade, already surpassing every previous decade on record. At the current pace, states could enact more than 100 top-rate cuts between 2020 and 2030.
- 16 states have cut their top income tax rate at least three times since 2020, roughly twice as many as in any previous decade.
- Among states cutting their top rates this decade, the median cumulative reduction is 1.3 percentage points — more than double the median reduction during the 2010s.
- Many states have used automatic triggers and multi-year phase-ins to lock in future cuts, allowing lawmakers to enact reductions whose full costs won’t show up until later budgets.
As the analysis highlights, the defining feature of the current tax-cutting era isn’t necessarily the size of any one tax cut. It’s the persistence: states are ratcheting down income tax rates year after year, producing large cumulative tax cuts for high-income households while making it harder to adequately fund education, infrastructure, health care, and other priorities.
That trend is especially consequential now, as recent federal policy changes are creating additional fiscal pressures for states rather than providing them with additional resources.
