State Rundown 1/30: The Revenue Decrease is in the Details

More details on this year’s batch of major tax proposals are emerging from statehouses – and some revenue cuts look like they could be steep. A governor-backed and House-passed plan in Mississippi would phase out the personal income tax, while a recent tax cut proposal out of Idaho is anchored by a $253 million dollar income tax cut.  

Elsewhere, in Missouri, the governor is calling to eliminate the personal income tax—the full details, like how to fund such a dramatic change to the state’s tax structure, however, were left to his staff to flesh out. And the governor of Nevada handed the legislature a budget proposal that failed to make up for an $85 million dollar deficit; it remains unclear whether that will result in revenue increases or service cuts in the Silver State. 

Major State Tax Proposals and Developments

• The MISSISSIPPI House passed a tax cut package backed by Gov. Tate Reeves. The bill phases out the state’s personal income tax over 10 years, reduces sales taxes on groceries, increases the local sales tax rate (with a built in opt-out), and enacts a fuel tax. The lieutenant governor and Senate have historically had less of an appetite for income tax elimination and are currently working on an alternative plan, despite pressure from Gov. Reeves. – NEVA BUTKUS 

• IDAHO lawmakers are preparing to debate three tax bills that include a $253 million income tax cut, a $50 million increase the state grocery credit from $120 to $155, and a $100 million property tax cut ($50 million of which is one-time spending) that will go to school districts and a homeowner property tax relief fund. – MARCO GUZMAN 

State of the State Addresses

• INDIANA Gov. Mike Braun focused heavily on property taxes during his address – including a proposal to cap property tax increases to 3 percent for all property types. He also told municipalities that while the property tax caps will impact their ability to raise revenue, they need to learn to do more with less.  

• MAINE Gov. Janet Mills outlined tax proposals in her yearly address, including an increase to the cigarette excise tax by $1 and a change to the way cannabis is taxed. 

• MISSOURI Gov. Mike Kehoe called for the elimination of the state’s personal income tax in his first ever State of the State. However, the governor did not outline any specifics, instead explaining that his staff was formulating a plan.  
• WISCONSIN Gov. Tony Evers touted his previous tax cuts and expansion of a state credit to offset some of the cost of child care in his State of the State address. Gov. Evers declared 2025 the “Year of the Kid” and laid out priorities around free school meals, mental health resources, supporting child care, and gun violence prevention.  

State Roundup

• School districts across GEORGIA are opting out of capping home value growth for property tax assessments, fearing the caps could lead to funding shortages. Lawmakers and voters approved a measure in November that caps home value growth but allows local governments to opt out by certain date.  

• INDIANA Gov. Mike Braun ordered $700 million in spending cuts to balance the state budget. He also expressed support for property tax cuts that would likely impact the budgets of local governments across the state.  

• MASSACHUSETTS Gov. Maura Healey released her budget proposal with annual spending growth of about 7 percent from the last fiscal year. Most of the growth is from the surcharge on high earners voters approved in 2022. However, the governor also proposed including candy in the state’s sales tax base. 

• NEVADA lawmakers are tasked with exploring ways to erase a $85 million deficit after Gov. Joe Lombardo recommended a two-year budget that did not include any offsetting revenue. 

• In NEW YORK, a coalition comprised of unions, community organizations, non-profits, and faith-based groups are advocating to increase taxes on high earners and the state’s most profitable corporations. The coalition is calling for a 0.5 percentage point increase on income taxes for individuals earning over $5 million and $25 million, as well as a 1.75 percentage point increase on the profits of large corporations. 

• OKLAHOMA Gov. Kevin Stitt has renewed his calls for a personal income tax cut of 0.5 percent and eventual elimination of the tax. The state recently eliminated its sales tax on groceries and faces a tighter fiscal picture this year. 

What We’re Reading

Eli Taylor Gross from the Washington State Budget and Policy Center and Treasure Mackley from of Invest in Washington Now penned an op-ed highlighting how states with upside-down tax codes (like Washington and Nevada) can—and should—build support for more progressive revenue wins. 

 

---

If you like what you are seeing in the Rundown (or even if you don’t) please send any feedback or tips for future posts to Aidan Davis at [email protected]. Click here to sign up to receive the Rundown via email.

---

---