As state legislative sessions ramp up across the country, property taxes are one of many issues dominating tax policy conversations in statehouses.
Florida and Kansas, for instance, are exploring caps on property tax assessments despite strong objections from local and municipal governments. Meanwhile, some Wyoming lawmakers seek to join Florida and Texas in their attempts to eliminate taxes on certain types of property altogether.
While local governments across the nation have been vocally opposed to the many expensive and untargeted property tax cuts circulating in statehouses, former journalists and lawmakers in Georgia and Florida are also calling out these expensive and unrealistic property and income tax cut proposals as theatrical.
Governors’ Annual Addresses and State of State Speeches
- In his annual address, ALASKA Gov. Mike Dunleavy said that he would not support raising revenue without cuts to spending. (More information on the governor’s fiscal plan is detailed below.)
- HAWAII Gov. Josh Green called on the state legislature to pause for three years scheduled tax cuts that originally passed in 2023, which is estimated to save about $1.8 billion as the state is expected to face a revenue shortfall. In addition to using the funds to address the shortfall, Gov. Green also proposed using $600 million of the revenue towards food security and childcare needs.
Major State Tax Proposals and Developments
- More details about ALASKA Gov. Mike Dunleavy’s fiscal plan are emerging. It includes the elimination of the state’s corporate income tax by 2031 and the creation of a seasonal sales tax of 2 percent for October through March and 4 percent for April through September, beginning in 2027 and ending in 2034. – MARCO GUZMAN
- With the OREGON Department of Transportation facing a $242 million revenue shortfall due to a ballot measure to pause most of the new funding until voters can have a say on it in the upcoming November election, the House Speaker and Senate President are introducing legislation to have the matter decided in the May 19 primary election instead. – MILES TRINIDAD
- The SOUTH DAKOTA Senate passed legislation that would require a local election to be held if a school board decides to exceed property tax limitations imposed by the state. The bill targets school district decisions to raise more revenue by opting out of current state-imposed property tax limitations. – MILES TRINIDAD
State Roundup
- Another property tax cut proposal in FLORIDA made its way to the House floor. Unlike the other proposals that involve the state’s homestead exemption, this bill would limit annual property tax rate increases to 3 percent or inflation – whichever is lower – for homesteads. The assessment increase limit for non-homesteads would also be lowered from 15 to 10 percent. Local governments have again expressed their disapproval of the legislation.
- A former FLORIDA state lawmaker called out Gov. Ron DeSantis, who has yet to release any formal details or estimates, on his proposed plan to eliminate property taxes.
- GEORGIA lawmakers are reconsidering a bill from 2025 that would eliminate all income taxes on tipped income.
- After years of persistent income tax cuts, IDAHO Gov. Brad Little called for state agencies to extend their 3 percent budget cuts into fiscal year 2027 to help relieve “budget pressures.” Lawmakers, however, are now exploring the idea of increasing those budget cuts to 4 or 5 percent. Meanwhile, IDAHO lawmakers proposed a bill to conform to tax provisions in the federal tax and spending law. The bill would also limit who can claim the deduction for research and experimentation.
- Senators in KANSAS passed out of their tax committee a 3 percent annual appraisal cap for property values. The bill would also roll back property values to 2022 assessments. Municipal and local governments oppose the legislation.
- MASSACHUSETTS Gov. Maura Healey proposed conforming to federal tax cuts for businesses over a period of five years. The measures, which mostly benefit large businesses, will cost the state about $660 million if fully adopted. Gov. Healey’s proposal pushes that cost into the future, but still – as proposed – eventually gives those benefits to large firms.
- At their annual Economic Outlook Seminar, speakers for the University of MONTANA‘s Bureau of Economic Business and Economic Research outlined the potential impact of a statewide sales tax. This conversation follows years of deep income tax cuts in the state.
- Gov. Tate Reeves of MISSISSIPPI opted into the school-choice tax credit program created by the Trump tax law. The legislation will offer Mississippi households with annual incomes below roughly $150,000 a dollar-for-dollar tax break on any contribution of up to $1,700 to scholarships for private schools.
- MISSOURI lawmakers have somewhat altered their proposal for a ballot initiative to raise sales tax in order to eliminate the personal income tax. The legislature continues to debate the measure, which would require approval by first the legislature then voters.
- NEW YORK City Mayor Zohran Mamdani announced the city has a two-year budget gap of over $12 billion. He’s pledged to cut the budget and be more transparent about budget issues than his predecessors while also reiterating his calls for progressive taxes.
- WYOMING lawmakers are pursuing property tax “reform” once again with bills to eliminate taxes on residential property and a companion bill to increase the sales tax by 2 percentage points, among others.
What We’re Reading
- The New York Times reports on how changes in Massachusetts law to permit raising property taxes on vacation homes has played out in high-cost areas like Cape Cod. The shift has been popular with full-time residents who struggle to afford the cost of living.
- An opinion piece in the Georgia Recorder calls out gubernatorial candidate Lt. Gov. Burt Jones’ push for income tax elimination an “election-year illusion” and cautions Georgians to any politician claiming they can eliminate half the state’s revenue without raising other taxes or cutting services.
- Don Griswold, a senior fellow for the Center on Budget and Policy Priorities, recently provided testimony before a Maine tax committee, and called for lawmakers to approve a bill that would close a loophole for offshore profit shifting.
- Meanwhile, ITEP’s own Sarah Austin testified before Washington’s House Finance Committee, encouraging lawmakers to consider our research, join others, and opt to not piggyback on the federal Qualified Small Business Stock (QSBS) exemption that would provide a steep handout to the wealthy.
- A new ITEP blog features an interview with Boston College Law Professor Ray Madoff, discussing her new book ‘The Second Estate: How Tax Code Made an American Aristocracy’. Madoff explains how the wealthy are using loopholes to avoid paying their fair share of taxes, while everyday Americans continue to contribute to society.
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