Idaho

State lawmakers are grappling with a range of challenges as their fiscal outlooks deteriorate, federal tax enforcement wanes (after the Trump administration cut the IRS workforce by 25 percent), and a rewritten federal tax code sends states scrambling to decide what changes they might want to make in their own codes.

While some may be excited for a romantic Valentine’s Day this weekend, many state lawmakers are breaking up and decoupling from recent federal tax changes that are poised to leave states with revenue shortfalls – much like a bad date who forgets their wallet and asks you to pick up the tab.

Despite wintry conditions across much of the country, that hasn’t stopped state lawmakers from debating major tax policy changes.

ITEP tracks tax discussions in legislatures across the country and uses our unique data capacity to analyze the revenue, distributional, and racial and ethnic impacts of many of these proposals. State Tax Watch offers the latest news and movement from each state.

As state legislative sessions ramp up across the country, property taxes are one of many issues dominating tax policy conversations in statehouses.

2025 saw an intensification of state and local tax fights across the country, as well as growing experimentation with local-option taxes, levies, fees, and tourism taxes aimed at keeping budgets afloat while also navigating political constraints imposed by state legislatures.

State governors are beginning to lay out their top priorities as legislatures reconvene in statehouses around the country.

With a little over a week left, some states are solidifying their spots on the tax policy “naughty or nice” list.

State deductions for tips and overtime are not only ineffective at supporting working-class people, it will come at a substantial cost to state budgets.

Lawmakers in two more states have wisely said “no thank you” to federal tax cuts that would have flowed through to their state tax codes and undermined funding for their priorities

Despite being an off-year election, voters made a call for shared public investments at the polls.

States across the nation are debating how best to respond to costly new federal tax cuts.

Some states continue to hand out huge tax cuts to millionaires. The five largest tax cuts this year will cost states a total of $2.2 billion per year once fully implemented.

Local governments have a critical role to play in reducing child poverty. Local Child Tax Credits could provide large tax cuts to families at the bottom of the income scale, lessening the overall regressivity of state and local tax systems.

Some states are trying to avoid revenue loss while others are welcoming it and doubling down.

Child Tax Credits (CTCs) are effective tools to bolster the economic security of low- and middle-income families and position the next generation for success.

Trump's megabill directs most benefits to the wealthy, while leaving younger generations with higher taxes, more debt, and fewer opportunities. For Millennials and Gen Z, it means reduced public investment and an economy less likely to work in their favor.

Federal policy choices on tariffs, taxes, and spending cuts will be deeply felt by all states, which will have less money available to fund key priorities. This year some states raised revenue to ensure that their coffers were well-funded, some proceeded with warranted caution, and many others passed large regressive tax cuts that pile on to the massive tax cuts the wealthiest just received under the federal megabill.

Refundable tax credits were a big part of state tax policy conversations this year. In 2025, nine states improved or created Child Tax Credits or Earned Income Tax Credits.

If instead of giving $117 billion to the richest 1 percent, that money had been evenly divided among all Americans, we'd each get $343 - or nearly $1,400 for a family of four.

President Trump has signed into law the tax and spending “megabill” that largely favors the richest taxpayers and provides working-class Americans with relatively small tax cuts that will in many cases be more than offset by Trump's tariffs.

As federal aid ends and economic uncertainty grows, local governments face tough budget choices. Now is the time for localities to protect vulnerable residents and build stronger, more equitable fiscal foundations.

The predominant feature of the tax and spending bill working its way through Congress is a massive tax cut for the richest 1 percent — a $114 billion benefit to the wealthiest people in the country in 2026 alone.

The Senate tax bill under debate right now would bring very large tax cuts to very high-income people. In total, the richest 1 percent would receive $114 billion in tax cuts next year alone. That would amount to nearly $61,000 for each of these affluent households.