Just Taxes Blog by ITEP

State Rundown 5/30: Sessions Are In for Summer

May 30, 2024

Legislative sessions across the country are still very much in for summer, which means more pencils, more budgets, and more tax plans. Lawmakers in the District of Columbia are working on a budget that raises revenue and protects low-income residents from potential cuts. They recently approved an early version of the fiscal 2025 budget that includes a property tax increase on high-value properties, a slight payroll tax increase to protect their paid family leave program, and a new Child Tax Credit. Speaking of which, Illinois’ final budget includes a new child benefit for kids 12 and under. And governors in Nebraska and Kansas are gearing up for special sessions that will likely focus on tax cuts.


Major State Tax Proposals and Developments

  • Lawmakers in the DISTRICT OF COLUMBIA gave their initial vote of approval to a $21 billion fiscal 2025 budget, which includes a new $420 child tax credit for kids under 6; a restoration of the Earned Income Tax Credit to an 85 percent match for tax year 2025 (a freeze appeared in the governor’s budget proposal); increased real property taxes on homes and condos valued over $2.5 million; and a bump to the payroll tax that funds the District’s paid family leave program. – MARCO GUZMAN
  • ILLINOIS legislators finalized the state’s budget for the upcoming fiscal year which included a range of tax changes. Included is a new child benefit for households with children 12 and younger who currently qualify for the state’s Earned Income Tax Credit. Households with qualifying children will receive a 20 percent boost to their state EITC this year and 40 percent boost in subsequent years. The new child benefit will be funded through additional taxes on sports wagering. The budget also includes a permanent elimination of the state’s 1 percent grocery tax. – NEVA BUTKUS


State Roundup

  • The CALIFORNIA Senate passed a bill that would authorize new funding for Bay Area transit. If approved, it would authorize the Metropolitan Transit Commission (MTC) to choose between a regional transaction and use tax, payroll tax, parcel tax, or regional vehicle registration. In total, the measure authorizes MTC to raise an additional $1.5 billion throughout the 9-county area. Additionally, the bill directs the state to study the feasibility of consolidating Bay Area transit authorities. The measure now moves to the House for consideration.
  • Gov. Laura Kelly of KANSAS has set the date for a special session to finalize a tax cut proposal after vetoing multiple bills over the course of regular session. The tax-focused special session will begin June 18th.
  • NEBRASKA Gov. Jim Pillen continues to tour the state attempting to build support for passing his tax plans in a special session this summer. Among the options being explored to raise revenue for property tax cuts are: $500 million in “streamlining” budget cuts, closing up to roughly 120 sales tax exemptions, finding ways to increase Nebraska’s share of federal funding, and raising “sin taxes” on nicotine and alcohol.
  • In Santa Fe, NEW MEXICO, a judge ruled against the city’s mansion tax on homes sold for more than $1 million, which was slated to go into effect this week. Santa Fe mayor Alan Webber hopes to appeal the decision.
  • In a recently published op-ed the NC Budget & Tax Center cautioned that NORTH CAROLINA’s decades-long pursuit of tax cuts should be a warning sign for states, not a model. It highlights that the state is estimated to lose more than $13 billion in annual tax revenue by 2031 as the state faces underfunded public services, such as education, transportation, and jobs training for the future.


What We’re Reading

  • A new resource from the Center on Budget and Policy Priorities tracks how state tax cutting sprees across the nation, which continue to occur, effect state budgets and key public investments.
  • The U.S. Department of Treasury and the Internal Revenue Service announced that all 50 states and D.C. are invited to participate in the Direct File, free tax filing program in 2025. ITEP’s Jon Whiten makes a strong case for why states should join and help residents save money and time during tax season.
  • The Los Angeles Times reports on the increasing practice, particularly in Nevada, of offering escape clauses to professional sports teams that let them out of non-relocation agreements if they are ever taxed in ways that differ from other businesses.



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