Income Taxes

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.

The results are a mixed bag, with some states enacting promising policies that will improve tax equity and others going in the opposite direction.

Four of the corporations whose CEOs flanked President Trump at his 2025 inauguration ceremony have now disclosed that they collectively received $51 billion in federal tax breaks in 2025, much of that likely from the One Big Beautiful Bill Act (OBBBA).

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

The company paid an effective federal income tax rate of just over 3.5% in 2025, the lowest it has recorded since the company went public as Facebook in 2012.

The Trump administration’s Council of Economic Advisors suggests that states consider drastically raising sales taxes and using those new revenues to pay for repealing taxes on corporate and personal income. Working-class families would face dramatic tax increases while the nation’s wealthiest families would see their state tax bills plummet.

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

Most states are adopting a very cautious approach so far this year as legislators begin their sessions and governors make their annual addresses, thanks to ongoing economic uncertainty and federal retrenchment.

They should take steps to protect and boost their own revenues. And they should take a second look at their own tax cuts.

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

This provision in last summer’s tax law could actually make budget-balancing a little bit easier for states if they follow suit.

Missouri lawmakers have been pushing regressive and shortsighted tax policies that undermine everyday workers and sabotage the Show-Me State’s ability to raise revenue.

As we kick off a new year, several states are facing revenue shortfalls. Some lawmakers are approaching the challenge with sustainable and equitable solutions.

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.

An unknown number of workers who previously were assumed to be ineligible for the tax break may nonetheless claim it.

A costly tax break for wealthy venture capitalists is drawing some critical attention from state policymakers.

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.

Maryland is taking aim at income and racial disparities through a revised personal income tax. By raising taxes on high earners and cutting them for most households across racial and ethnic lines, the state is proving that progressive tax policy can drive both equity and revenue.

The megabill will raise taxes on the poorest 40 percent of Americans, barely cut them for the middle 20 percent, and cut them tremendously for the wealthiest Americans next year.

This country’s biggest historical challenge has been delivering this progress to all Americans, but Republicans have cut it back for everyone, retreating from many 20th century achievements in ways that will slam doors, rather than opening them, for the next generation.

$117 billion is a big number, so we thought it could use a little context.

Congress and the president could have spent less than half that much money on a tax bill that does more for working-class and middle-class households.

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.