Despite being an off-year election, voters made a call for shared public investments at the polls. In New York City, voters showed their support for Zohran Mamdani, who campaigned on providing universal childcare and free city buses funded by taxes on the city’s wealthiest residents and corporations. In Colorado, voters approved ballot measures to ensure that revenues from limiting high-income filers’ deductions help fund a program that will provide all public school students with free breakfast and lunch. And – in other news – in the District of Columbia, the Council protected revenue by decoupling from harmful provisions in the federal megabill to reinstate and expand the District’s Child Tax Credit to $1,000 per child and speed up increases to the Earned Income Tax to reach 100 percent of the federal credit.
There are many great ideas for ways to equitably fund robust public investments. In a recent report, ITEP lays out a new one: a Wealth Proceeds Tax. This reform offers a simple, innovative way for states to tax the wealthy with a new levy on the passive proceeds created by wealth. Check out the report to see the revenue potential of this reform in your state.
Major State Tax Proposals and Developments
- COLORADO voters approved two tax-related ballot measures that will affect how the Healthy School Meals for All Program will be funded. Proposition LL will allow the state to keep $12.4 million in “excess revenue” for the program, while Proposition MM will reduce state income tax deductions for taxpayers earning $300,000 or more to generate more revenue for the program—additional reserves will then help fund the state’s Supplemental Nutrition Assistance Program (SNAP) in the face of harmful federal cuts to the program. – MARCO GUZMAN
- DELAWARE Gov. Matt Meyer called a special session for Nov. 13 to address an estimated $400 million loss in revenue over two years due to the Trump megabill. Gov. Meyer said that because Delaware’s tax code mirrors federal law, the cuts included in the Trump megabill would provide “massive corporate giveaways.” Gov. Meyer supports decoupling the state from the federal tax changes to prevent reductions in state revenue. – MILES TRINIDAD
- The DISTRICT OF COLUMBIA Council voted to decouple from costly and harmful tax provisions in Trump’s megabill. They include business and other personal income tax exemptions, including a full decoupling from the Qualified Small Business Stock (QSBS) exclusion – a clear giveaway to multimillionaire and billionaire venture capitalists. Importantly, in an amendment, the Council voted to use the revenue saved to reinstate and expand the Child Tax Credit to $1,000 per child and bring their Earned Income Tax Credit from 85 percent of the federal credit up to 100 percent. – MARCO GUZMAN
- Voters in TEXAS approved multiple constitutional amendments that worsen tax equity and tax policy in the state. The measures included six ways the state will lower property taxes for specific groups, including an increased homestead exemption with additional exemptions for seniors. Voters also approved propositions to ban taxes on capital gains, inheritances, stock exchanges, and broker deals. – NEVA BUTKUS
State Roundup
- IDAHO budget writers are preparing for an upcoming year that will require tough decisions. The state is projected to end the current fiscal year 2026 with an almost $50 million deficit, with the main culprit being a reduction in revenues by $450 million to pay for tax cuts and a new private education tax credit. The projected deficit does not include the costs of remaining coupled to the tax changes included in the Trump megabill or the more than $100 million in supplemental funding requests that will be considered in 2026.
- ILLINOIS lawmakers passed a $1.5 billion transit bill that funds public transit primarily in the Chicago area. The bill uses sales tax revenue on motor fuel purchases and interest from the state’s Road Fund. It also calls for raising the current Regional Transportation Authority sales tax by 0.25 percentage points in Cook and suburban counties. Left out of the tax package was a previous proposal to tax billionaires on unrealized gains on investment assets.
- Lawmakers in INDIANA are considering implications from the federal tax and spending bill alongside redistricting in an upcoming special session. The Indiana Department of Revenue has identified the adoption tax credit changes, depreciation, and others as items the state should consider actively coupling to. Doing so would likely result in revenue loss for the state.
- MICHIGAN’S legal marijuana industry association has asked a judge to block a new excise tax on marijuana as a legal challenge is underway. The association says the new 24 percent wholesale tax on top of existing taxes would harm existing legal businesses. The new tax is estimated to raise $420 million and would be used to fund road infrastructure projects.
- As a result of income tax cuts, federal budget and tax changes, and a slowing economy, NEBRASKA’s forecasting board quadrupled the state’s projected revenue shortfall for the upcoming budget from $95 million to $451 million. Anti-tax lawmakers and Gov. Jim Pillen have already begun downplaying the shortfall and insisting on defunding Nebraskans’ priorities in response, while a brand new school finance commission is just hoping to “hold the line” and avoid cuts to schools. But this news should breathe more life into efforts to raise new revenues or slow the bleeding from previously enacted tax cuts that are still phasing in.
- A NEW MEXICO appeals court has upheld the mansion tax in Santa Fe. The tax will support mortgage and rental assistance in the city.
- The OHIO House passed two property tax bills that would provide $2.4 billion in tax cuts, which is estimated to be about a 10 percent cut, over three years by limiting increases to inflation. However, the Senate Ways and Means Committee Chairman said that it is unlikely the bill will pass in the Senate.
- OREGON Gov. Tina Kotek still has not signed a major transportation funding bill, which would raise $4 billion for infrastructure projects in the state over the next decade through increases to the gas tax and other transportation-related fees, as Republican leaders have vowed to put a reversal of the tax increases on a ballot referendum. Each day that Gov. Kotek withholds her signature, opponents of the law cannot collect signatures to force a public vote on the tax increases. Gov. Kotek has until Nov. 12 to sign the bill, and Republicans would have until Dec. 30 to collect the nearly 78,000 signatures needed to put the referendum on the ballot.
- PENNSYLVANIA lawmakers introduced legislation, announced as the “Tax Billionaires, Fund PA” plan, which is estimated to raise $4 billion in new revenue. The three bills included in the plan would close corporate tax loopholes that allow companies to dodge taxes by shifting profits out of state by enacting worldwide combined reporting, create a digital advertisement tax focused on companies that profit off using personal data for advertisements, and increase taxes on unearned income – such as stocks, real estate, and trusts.
- WASHINGTON state lawmakers who met to brainstorm ways of improving the state’s revenue system made waves by including an income tax on millionaires for consideration. Gov. Bob Ferguson is skeptical, and the idea would have a long journey to become law, but those advocating for improved revenue adequacy and fairness are encouraged that an income tax – the cornerstone of good, fair tax policy – is on the table.
What We’re Reading
- A podcast episode (season 4, episode 8) from the Public Money Pod highlights the Arizona school voucher program—which has no income eligibility cap and has swelled in cost—and the effect it’s having on city and public-school budgets (spoiler alert: it’s not good).
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