Michigan

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.

A new proposal in Michigan would create a 5-percentage point surcharge on top earners with taxable incomes over $1 million for joint filers and $500,000 for single filers. This would raise about $1.7 billion a year, which would be used for public education priorities.

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.

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.

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.

property tax debates are taking place throughout the nation.

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.

Vacancy taxes will not single-handedly solve problems in cities, but they are worth considering to address housing shortages, land use, and building thriving communities.

Revenue forecasts look increasingly grim as states anticipate shortfalls due to the slowing economy and impacts of the new federal tax law.

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.

States should immediately decouple from four costly corporate tax provisions in the new federal tax law.

Despite an increasingly bleak state revenue outlook, state lawmakers across the country continue to prioritize regressive tax cuts.

Sales tax holidays are often marketed as relief for everyday families, but they do little to address the deeper inequities of regressive sales taxes. In 2025, 18 states offer these holidays at a collective cost of $1.3 billion.

Across-the-board property tax cuts create less fair local tax systems in the long run. State legislators and local governments should prioritize the residents who can least afford their property taxes, not the residents and businesses who can.

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.

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.

The auto loan interest deduction that recently passed the House is designed, at least in part, to mitigate the impact of tariff-induced price increases on vehicles assembled in America. But the deduction is incapable of offsetting even small-scale price increases, especially for working-class families and others with moderate incomes.

State legislatures are enjoying a relatively quiet period right now, though it is merely a temporary calm before the storm of the federal tax and budget debate begins raging again.

The poorest fifth of Americans would receive 1 percent of the House reconciliation bill's net tax cuts in 2026 while the richest fifth of Americans would receive two-thirds of the tax cuts. The richest 5 percent alone would receive a little less than half of the net tax cuts that year.

Want to know more about the tax and spending megabill that President Trump recently signed into law? We've got you covered.