State Tax Watch 2024
Updated July 15, 2024
In 2024, state lawmakers have a choice: advance tax policy that improves equity and helps communities thrive, or push tax policies that disproportionately benefit the wealthy, drain funding for critical public services, and make it harder for low-income and working families to get ahead.
Despite worsening state fiscal conditions, we expect that many state policymakers will continue to push for deep tax cuts. On the other hand, we expect many others to continue creating and expanding refundable tax credits that can help low- and moderate-income families. And we expect some to advance bold new revenue proposals that could raise new money for the public good in a way that reflects residents’ ability to pay.
ITEP is tracking tax discussions in legislatures across the country and using our unique data capacity to analyze the revenue, distributional, and racial and ethnic impacts of many of these tax proposals. This page is updated with the latest news and movement from each state.
To learn more about state tax proposals, hover over each state below.
Below are summaries of tax legislation discussed or approved in each state. Click on your state to jump to the summary.
You can also get weekly updates by signing up for our State Rundown.
Alabama
Alabama passed a universal school voucher program. Students will receive a $7,000 education savings account that will be open to students for the 2027 school year and can be used for private school tuition, homeschool, and other educational costs. Meanwhile, legislation that exempted overtime pay from state income tax last year is expected to cost $150 million more than initially anticipated. Gov. Ivey also signed off on legislation that will provide tax breaks to corporations providing child care and certain child care facilities.
The state's grocery tax rate will remain at 3 percent in 2024. The rate will drop to 2 percent when certain growth metrics are met within the state's Education Trust Fund.
Alaska
No major tax changes this year.
Lawmakers did consider tripling the state's property tax exemption for seniors, the disabled, and widows. The plan would have raised the state's exemption from $150,000 to $450,000 and resulted in up to $200 million in lost revenue.
Meanwhile, a group of business leaders working with the Anchorage Economic Development Corp. proposed a 3 percent sales tax to allow for property tax cuts and fund new construction projects. The proposed tax base would not include groceries, rent payments, childcare, gas, medical expenses, and items that are resold. Previous competing proposals would levy a statewide personal income tax.
Arizona
A preliminary budget document previews budget cuts being considered by lawmakers and the governor. The plan would cut almost every state agency's budget by around 3.45 percent, totaling roughly $44.3 million in cuts. Arizona State University would see the biggest monetary reduction at $10.9 million.
With budget negotiations ongoing, Gov. Hobbs has stated her goal to pare back the state's school voucher program and increase the percentage of land trust earnings to be used on education (via an extension of Prop 123). This comes after the state's nonpartisan budget committee found Arizona will face a $1.7 billion shortfall, mainly due to deep cuts to the state's income tax and a school voucher program that has exceeded cost estimates.
Arkansas
Following a special session, Gov. Sanders signed legislation that cuts income tax rates for the fourth time in less than two years. The most recent cut will lower the state’s top personal income tax rate to 3.9 percent, reduce its corporate income tax rate to 4.3 percent, and increase the state homestead property tax credit. The legislation is expected to cost $483 million the first year with nearly 75 percent of the cut going to households in the top 20 percent of income earners.
California
The state Supreme Court ruled that the anti-tax Taxpayer Protection Act cannot appear on the November ballot. The measure would have severely limited the state’s ability to raise revenue by retroactively requiring two-thirds voter approval on all local tax increases and requiring state tax increases to also go to the ballot for majority support. The court unanimously ruled that the measure “would substantially alter our basic plan of government” and therefore would require two-thirds approval by the legislature and a revision to the constitution.
Meanwhile, as part of his May revised budget proposal Gov. Newsom proposed a suspension of the state’s net operating loss (NOL) deduction and a limit to the deduction of $5 million. If enacted, this temporary change could raise $5.5 billion in fiscal year 2026. Faced with a significant budget deficit, lawmakers continue to discuss options to address the shortfall.
Colorado
Lawmakers announced a tax deal with Gov. Polis, pieces of which have already been signed into law. It includes a new credit that will serve as a more robust Child Tax Credit and an increase to the state’s Earned Income Tax Credit (from 38 to 50 percent of the federal credit in 2024, and then 35 percent in 2025 and 25 percent in 2026 and beyond, with conditional increases to the credit --up to a maximum credit of 50 percent of federal--based on revenue growth subject to TABOR). The state has been on a trajectory to reduce its EITC to 20 percent of the federal credit. The bill to increase the state Earned Income Tax Credit also combines two childcare credits into one credit and modifies requirements for corporations filing combined returns.
In response to some of the governor's priorities, lawmakers also agreed to cut income tax rates in years when the budget surplus exceeds $300 million (resulting in a $450 million cut this year) and a temporary sales tax cut from 2.9 percent to 2.77 percent when the surplus exceeds $1.5 billion. These cuts apply TABOR surplus dollars to personal income and sales tax rate cuts. Earlier this year, Gov. Polis noted that "taxes are simply too high" in his 2024 State of the State address, with no recognition of their vital role in funding key priorities.
In addition, lawmakers approved a bill that cuts property taxes by reducing valuations for residential and commercial properties. It also enacts a local revenue growth limit. Senate Bill 233 is expected to be signed into law by the governor. In addition to that bill, ballot measures 50 and 108, which would cap assessment rates at 4 percent and require voter approval for government to retain revenues above that amount will appear on the state ballot this fall.
Connecticut
Lawmakers are set to meet for special session to consider a measure that will affect the state's vehicle tax. The goal is to avoid an unintended tax increase on commercial vehicles registered in municipalities where the mill rate is higher than the statewide cap. Options under consideration include full elimination of the car tax or HB 5172, which adds a depreciation schedule and a car tax cap.
After cutting income tax rates for low- and middle-income households and increasing the state's EITC in 2023, Gov. Lamont has backed off plans for further cuts. State revenue reports show declining tax collections. However, a push for a state Child Tax Credit and various revenue raisers--including a surcharge on capital gains income and a higher top income tax rate--continues.
D.C.
The D.C. Council unanimously approved the city’s budget, which includes a new Child Tax Credit of up to $420 per child under the age of 6; a property tax increase for high-value properties (those valued at or above $2.5 million); a payroll tax increase for D.C.'s paid family leave program, from 0.62 percent to 0.75 percent; and a 1 percentage point sales tax increase over two years. The budget restores the District's EITC to an 85 percent match for tax year 2025 (a freeze appeared in the mayor's recent budget proposal).
Mayor Bowser's 2025 budget proposal, by contrast, included freezing the scheduled EITC increase at 70 percent of the federal amount; an increase to the sales tax rate to 6.5 percent in fiscal year 2026 and 7 percent in fiscal year 2027; and an electric vehicle tax of up to 3 percent, among other things.
The DC Tax Revision Commission continues to work through its comprehensive recommendations which are expected to be released later this year. Items initially considered included creating a state-level Child Tax Credit, enhancing the state's Earned Income Tax Credit, a graduated tax on the highest-value homes, expanding the property tax circuit breaker, closing tax loopholes, and modernizing corporate taxes.
Delaware
Republican lawmakers are pushing several tax proposals this year, ranging from business tax credits to a cut to the state’s existing Real Estate Transfer tax.
Florida
The Florida legislature finished session with their omnibus tax bill that does nothing to move the needle on Florida's deeply regressive tax system. The new bill renews multiple sales tax holidays, creates and expands certain credits for corporations, and provides a temporary tax deduction on certain residential property and personal or commercial flood insurance policies. The legislature also passed legislation that will begin adjusting the $25,000 homestead exemption that applies to assessed value between $50,000 and $75,000 for inflation, but this must first be approved by Florida voters.
These changes, alongside the state's universal voucher program that was passed in 2023, have the potential to further deteriorate funding for public education. Lawmakers are also exploring legislation that would make it more difficult for local governments to raise property taxes by imposing a supermajority requirement. A bill to study replacing property taxes with consumption taxes was also considered.
Georgia
Lawmakers passed, and Gov. Kemp signed off on, a pair of income tax cut bills that will accelerate the planned income tax cut for individuals to 5.39 percent (from 5.49 percent) and cut the corporate income tax rate in line with the personal income tax cuts (which are scheduled to drop 0.1 percent a year until reaching 4.99 percent, if revenues hold). Retroactive to January 1, 2024, the cuts will result in a $700 million annual revenue loss. The governor also approved raising the amount taxpayers can deduct for children and other dependents and approved a fetal personhood bill that will result in an additional $100 million in claimed dependent exemptions.
Multiple property tax cut bills were sent to the desk of Gov. Kemp. He signed off on a measure that will cap the growth in value of a home, as assessed for property taxes, to the rate of inflation. Municipalities will have a one-time opportunity to opt out of this mandate and can also increase sales taxes by a penny to replace lost property tax revenue. The measure will take effect if voters approve a state constitutional amendment on the November ballot.
Lawmakers were unable to come to a consensus on capping the state’s billion-dollar film credit, effectively killing the effort this session.
Hawaii
Both chambers of the legislature voted unanimously to approve a major income tax cut estimated to cost more than $5 billion by 2030. The bill would alternate increases to the standard deduction and adjustments to income tax brackets through 2030. An ITEP analysis found that 42 percent of the overall benefits from the cuts would go to the top 20 percent of earners who, on average, earn $304,000 a year.
A separate bill that would have exempted some of the state’s wealthiest households from the estate tax failed to advance in the legislature. Other bills that were proposed but have not seen recent movement include Gov. Green’s higher state conveyance tax on sales of luxury homes over $2 million, an increase to the state’s cigarette tax from $3.20 to $3.60 per pack, adjusting the state’s standard deductions, tax brackets, and personal exemptions for inflation, and an increase to the percentage of expenses covered by the Child and Dependent Care Tax Credit.
Lawmakers appear likely to pass a $25 “tourist tax” on visitors to fund climate change mitigation efforts. And pushes to eliminate the state's capital gains loophole and create a state Child Tax Credit remain part of the debate.
Idaho
Gov. Little signed a bill into law that will cut the state’s individual and corporate income tax rates from 5.8 percent to 5.695 percent and move sales tax revenues to fund schools and other annual bonds in the case of an economic downturn.
Private school tax credits were also a priority for Gov. Little and legislative Republicans this session, but the state's voucher bill was ultimately defeated.
Illinois
Gov. Pritzker signed the state’s 2025 budget into law. Included are a new tiered tax structure on sports betting which is expected to raise roughly $200 million a year. This new revenue will fund a new child benefit for working families. The credit provides an income boost to families who receive the state EITC and have children 12 and younger. Households with qualifying children will receive a 20 percent boost to their state EITC this year and 40 percent boost in subsequent years. The legislation also permanently eliminates the state’s 1 percent grocery tax.
During session, lawmakers and advocates alike continued to work to enact a robust Child Tax Credit and made the case for new revenue through higher taxes on the wealthy and closing corporate loopholes. Lawmakers also considered changes to the state’s estate tax to accommodate family farms.
Following a legal challenge, the mansion tax proposal in Chicago appeared on the ballot but came up short. The proposal would have decreased the real estate transfer tax on properties sold for under $1 million and increase it on properties sold for over $1 million.
Indiana
While tax was not the focus of the 2024 legislative session in Indiana, the Indiana State and Local Tax Review Task Force continues its work. The Task Force will soon resume meeting and must submit a report on tax recommendations by December of this year. Despite a prior focus on reducing or eliminating Indiana's personal income tax, the Task Force has been encouraged to address rising property taxes as a priority.
Iowa
Gov. Reynolds signed legislation that will deepen and accelerate the state’s income tax cuts that are in the process of phasing-in (originally enacted in 2022). The new cuts will consolidate and lower the state’s tiered personal income tax structure to a flat 3.8 percent in 2025, as opposed to a flat 3.9 percent by 2026, reducing revenues by an additional $328 million in 2025 and $605 million in 2026. An analysis by ITEP shows that 68 percent of the tax cut from 2024 to 2025 will go to households in the top 20 percent with average annual household incomes of $286,300.
The legislature also passed two constitutional amendment proposals that would mandate flat personal income taxes and require a supermajority to raise taxes in the future. These proposed amendments must make it through both chambers in an additional legislative session before making their way to voters. Gov. Kim Reynolds aslo signed legislation that increases the tax deduction allowed through contributions to the state's 529 accounts.
Earlier this year, the House Appropriations Committee chair expressed reservations about further reducing the income tax rate. However, over the course of session, multiple income tax cut bills made their way through the legislature. One would have brought the rate to 3.5 percent by 2025, another would bring the rate to 3.65 percent by 2027 and continue to phase out the income tax entirely with one-time money from the Taxpayer Relief Fund. Gov. Reynolds also proposed reducing the rate to 3.5 percent.
Kansas
Gov. Kelly and the state legislature came to a tax cut compromise during their special session. The result: $2 billion in lost revenue via tax cuts over the next five years. The legislation will reduce the state’s personal income tax brackets from three to two, increase the state standard deduction and personal exemption, create a new dependent exemption, exempt all Social Security income from tax, increase the nonrefundable child and dependent care credit, and increase the homestead exemption to $75,000 (up from $42,000).
This agreement followed a contentious tax-cut-focused regular session in which three tax proposals were vetoed by Gov. Kelly. While each tax proposal included similar core components -- a full Social Security exemption, changes to the state's standard deduction and/or personal exemptions, an increase to the homestead exemption, and speeding up the state's grocery tax elimination -- there were policies in each plan that resulted in significant differences in each proposal's cost.
• The first vetoed plan replaced Kansas' tiered income tax structure with a 5.25 percent flat personal income tax, a nonstarter for Gov. Kelly. The deeply regressive plan would have cost the state $1.6 billion over three years. Lawmakers attempted, but failed, to override the governor’s veto.
• The second vetoed package (expected to cost $1.57 billion over three years) would have flattened income tax brackets and cut rates as opposed to creating a flat tax. It also included a new dependent exemption and reduced the property tax millage for schools. The Senate objected to this veto but failed to override it, marking the third time in two years (the second in 2024) the legislature failed to override the veto of a tax cut bill.
• The legislature then scrambled to put together another bill that mirrored the recently vetoed legislation but included less expensive cuts to the personal income tax structure. The bill is expected to cost $2.3 billion over five years.
Kentucky
The legislative session ended without major tax changes. Although there was some discussion of further personal income tax cuts, and a proposal to freeze property tax valuations for those 65 and older regardless of income or need. Neither idea passed this session.
Louisiana
A constitutional convention is being discussed. Legislation for convention has already been approved by the House. And the Senate is now considering holding hearings throughout the summer and calling a special session in the Fall to officially begin the convention. Among issues under consideration, lawmakers have expressed their willingness to change the state’s constitutional prohibition on taxing groceries, utilities, and prescription drugs. Meanwhile, the state's Department of Revenue Secretary is making the case that the state should expand its sales tax base and eliminate sales tax exemptions to “buy down” the state’s personal and corporate income tax rates.
Earlier this year, Gov. Landry released tax recommendations from his transition committee on economic development and fiscal policy. They include the extreme measures of phasing out the state’s personal and corporate income taxes and corporate franchise tax, reducing severance taxes on oil and gas, and eliminating the inventory tax and inventory tax credit.
Gov. Landry also rolled back the job creation requirement for the state’s Industrial Tax Exemption Program, which allows companies to receive large local property tax exemptions for industrial projects. He removed the requirement that the exemptions receive approval from local taxing authorities who would be directly impacted by the exemption.
The 2024 legislative session is a non-fiscal session in Louisiana. The state is expected to take up issues of taxation more broadly in 2025. However, lawmakers are considering a bill that would create education savings accounts that would use public dollars to subsidize private school tuition.
Maine
Gov. Mills vetoed a bill that would have made the state's income tax more progressive. The legislation would have created a higher tax bracket for those earning over $500,000 while reducing taxes for low- and middle-income households.
Meanwhile, Gov. Mills signed a bill repealing a 2005 law that placed limitations on municipal tax collection. Lawmakers also remain focused on corporate tax transparency and property tax issues.
Maryland
Maryland lawmakers reached a budget deal that will raise about $252 million. The package includes a new statewide fee for ride-hailing services, increased vehicle registration fees, a surcharge on zero-emission electric vehicles, and an increase to tobacco taxes.
The deal comes after the Senate rejected the House's budget that would have raised about $1.2 billion to address the state's budget shortfall. That proposal included worldwide combined reporting for corporate taxes, new taxes, increased fees and tolls, and legalizing internet gambling.
Meanwhile, Gov. Moore signed legislation that allows local jurisdictions to impose higher property tax rates on structures and lots that are vacant. And, in a dispute over the state’s digital advertising tax, a judge ruled in favor of the state and dismissed claims that it violates First Amendment rights. The ruling enables the state to continue collecting the tax (which was originally enacted in 2021).
Massachusetts
Gov. Healey recently announced to business leaders that there are no plans for new taxes or to raise existing taxes. She does, however, still support bills that would allow municipalities to levy local taxes such as fees on certain high-value real estate sales, taxes on meals and lodging, and surcharges on top of existing vehicle excise taxes.
Meanwhile, the legislature is focused on the implementation of the Fair Share Amendment, the successful 2022 ballot initiative that creates a 4 percent surcharge on income over $1 million to fund education and transportation projects, and other recent changes under 2023 legislation. Lawmakers have also proposed legislation that would enact an annual excise tax of 2.5 percent on private collegiate institutions with endowments larger than $1 billion. They are also pushing to ensure that immigrants filing with Individual Taxpayer Identification Numbers (or ITINs) are eligible for the state’s Earned Income Tax Credit.
Michigan
Gov. Whitmer has called on lawmakers to provide universal pre-K and make community college free to all high school graduates, alongside a handful of credit and rebate programs. No revenue raisers or pay-fors have been announced. However, lawmakers are considering a study to examine a road usage charge. The proposed study comes as the final tranche of funding reserved in 2019 for highway reconstruction projects is scheduled to end this year, and lawmakers are looking to additional revenue sources as the state faces a revenue shortfall.
Meanwhile, the state's temporary income tax cut will expire after this year. The Court of Appeals unanimously ruled that the personal rate reduction for 2023 was intended to last for only one year after the rate was reduced from 4.25 percent to 4.05 percent when the state’s budget surplus exceeded a certain level when measured against inflation. However, state lawmakers have asked the state’s Supreme Court to reverse the appeals court’s ruling that the inflation-based income tax cut was only temporary.
Minnesota
The House and Senate will head to conference committee to work through competing tax proposals. The House proposed expanding the state’s Child Tax Credit to include dependents who are 18 years old. The current credit only allows filers to claim dependents age 17 and younger. The House is also proposing the Department of Revenue be required to draft a report on corporate tax base erosion and consider tax revenue that has been missed due to the state's failure to enact worldwide combined reporting. It has also proposed the department disclose corporate franchise tax return data for larger businesses and offer a new free-file option for individual taxpayers. Meanwhile, the Senate wants to expedite payments from the state's Child Tax Credit and create a new tax exemption on building materials used during the construction of schools, city halls, and arenas.
Mississippi
Revenue estimates show stagnating collections in Mississippi, due in part to the state's recently passed flat tax. In a rare gubernatorial move, Gov. Reeves condemned the revenue forecast due to its inability to make room for additional personal income tax cuts.
Reeves reemphasized this commitment in his budget plan where he calls for an end to the state’s personal income tax by 2029.
Missouri
The state's legislative session has come to a close. Lawmakers agreed to increase a tax credit for donations to private and religious schools. And Gov. Parson announced support for several small bipartisan tax credits aimed at reducing the cost of child care (each initially capped at $20 million). They would support donations to child care facilities, employer spending on child care, and child care facility employer withholding tax and a percentage of capital expenditures.
Bill that were discussed, but did not make it to the finish line include: a bill that would fully eliminate the state's corporate income tax, currently at 4 percent, by 2028; grocery tax elimination; reductions in personal property taxes for vehicles; and an expansion of tax benefits for seniors. The state is also considering pre-empting local income taxes and property tax assessments in Jackson County. Additionally, the House advanced a measure to eliminate the state’s corporate income and franchise taxes over time.
A gubernatorial candidate has proposed eliminating Missouri’s personal income tax, as well as rolling back a gas tax hike. His advisory committee draws heavily from those behind the disastrous “Kansas experiment” that led to a collapse in state services and revenues and was eventually rolled back by a bipartisan group of lawmakers.
Montana
The state's legislature is not in session this year, but Gov. Gianforte made appointments to a task force that will consider recommendations for cutting property taxes.
Meanwhile, Democrats previewed their property tax plan for 2025’s legislative session, which includes a new homestead exemption for residential and commercial property owners, a tiered property tax rate structure, and a targeted tax credit for seniors, low- and middle-income homeowners and renters.
Nebraska
Lawmakers ended their legislative session by allowing Gov. Pillen’s tax plan—to reduce property taxes by raising and expanding sales and excise taxes—to die without a final vote. The bill had been whittled down to a smaller compromise, but lacked support because it was still a regressive tax shift overall and included a digital ads tax. Gov. Pillen and lawmakers are now planning for a tax-focused special session this summer (scheduled to take place between July 25 and August 15). Details of Gov. Jim Pillen’s plan for that special session are slowly coming into focus. The proposal that will kick off the session is likely to include a state takeover of K-12 school operational funding, strict restrictions on local spending, an assortment of rate hikes on specific items, and an extreme expansion of the state sales tax base, including to business and agricultural inputs. Lawmakers have expressed some openness to the discussion but few believe such a massive overhaul can or should be achieved in a two-week session as Pillen intends.
The effort to replace most of Nebraska's tax system with a single consumption tax – dubbed the “EPIC Tax” – will not appear on the November ballot after failing to gather enough signatures. Supporters will still bring their proposal to the legislature during a special session set to occur later this month, but it has repeatedly failed to gain significant support there as well.
Though legislators did not pass a major tax bill this year, they did enact an effort to undercut voters’ opportunity to repeal last year’s private school scholarship tax credit and enacted several smaller changes, including a sales tax exemption for diapers and a film credit.
Nevada
Nevada's legislature is not in session this year. But the state's Supreme Court ruled against the organization Schools Over Stadiums in their effort to give voters a chance to call off $380 million in public funding that legislators approved for a new Major League Baseball stadium. The initiative was ruled ineligible to appear on the ballot due to inadequate wording.
Meanwhile, the state could face a big revenue shortfall for roads and bridges if a policy allowing gas taxes to grow in pace with construction inflation expires as scheduled at the end of 2026.
New Hampshire
The House passed a bill to legalize cannabis and levy a 10 percent tax on monthly sales. The proposal now heads to the Senate.
Meanwhile, state courts continue to litigate a recent court decision that found the state is sending too little funds to its public schools and is violating the constitution, which would require the state to spend an additional $3,256 per student each year, or about $537 million per year. If the ruling stands, legislators would need to determine how to meet the new funding requirements.
New Jersey
Gov. Phil Murphy signed off on a deal that lawmakers approved to levy a 2.5 percent surtax on corporations earning over $10 million in profits. Notably, this means legislators will not pursue a proposal that would have increased the sales tax rate from 6.625 percent to 7 percent. Meanwhile, Gov. Murphy signed bills that would increase the state gas tax 1.9 cents per gallon for 5 years and authorize a $250 fee on electric vehicle owners.
New Mexico
Gov. Lujan Grisham approved the legislature's omnibus tax bill which includes progressive provisions to tax the wealthy. The bill will, among other things, restructure personal income tax brackets, place additional limitations on the state’s capital gains deduction, and replace the two-tiered corporate income tax rate with the single, higher rate. She also signed a workforce guaranteed income pilot program into law that will provide monthly payments of $1,000 for up to a year to New Mexicans who attend qualifying workforce training programs.
Lawmakers have also made increasing the alcohol tax by 25 cents per drink a priority in 2024. In local news, a Sante Fe 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's mayor hopes to appeal the decision.
New York
Lawmakers have completed work on the state budget, leaving out tax increases on high-income families. And despite advocates’ best efforts to simplify and improve the state’s system of tax credits for middle- and low-income families, the budget included only a one-time boost to the existing Empire State Child Credit. Gov. Kathy Hochul has also proposed using a new payroll tax to replace the revenue from Manhattan congestion pricing tolls she's indefinitely postponed, but lawmakers are not interested so far. The congestion pricing plan, scheduled to take effect at the end of June, would have raised additional transportation funds for New York City through a charge on commuters into Manhattan.
Earlier this year, the House and Senate released budget proposals that each included small 0.5-percent temporary income tax increases on households with annual earnings over $5 million. Tax credits to promote affordable housing were also discussed. The Senate’s proposal includes a Working Families Tax Credit that would replace the state’s existing Empire State Child Credit and Earned Income Credit with a combined credit meant to hold current recipients harmless and grow over time to boost family incomes and reduce child poverty.
Despite the state’s revenue shortfall and widespread recognition that major housing investments are needed, Gov. Hochul adopted a staunch anti-tax tone and has referred to the 0.5-percent tax on income over $5 million a year as a “nonstarter.”
Meanwhile, a lawsuit seeking to rectify property tax assessment inequities will proceed after a recent court ruling. The plaintiffs hope to force reform to a system that has resulted in higher property taxes on families of color and low-income households for decades.
North Carolina
Gov. Cooper signed legislation increasing the aggregate cap on the maximum vehicle registration excise tax rate that transportation authorities can levy on registered motor vehicles from $8 to $10 a year.
In his budget proposal, Gov. Cooper called for fewer giveaways for corporations and the wealthy by pushing back against taxpayer-funded private school vouchers (via a moratorium) and by proposing rollback to some of the state's deep income tax cuts. To that end, he would keep the corporate income tax rate at its current 2.5 percent rate rather than allowing it to fully phase out. His proposal would also replace the state's flat individual income tax of 4.75 percent with two tax brackets: a rate of 4.5 percent in 2025 and 3.99 percent in 2026 (for those with incomes below $200,000) while maintaining a rate of 4.75 percent for those with annual incomes exceeding $200,000. His budget would also increase teacher pay and provide additional funding for childcare. On the latter, he recommended a refundable child and dependent care credit that is equal to up to 50 percent of the federal credit.
Meanwhile, Republican lawmakers are discussing the possibility of a taxpayer rebate – citing the state’s $1.4 billion revenue surplus. Lawmakers are also pursuing a more stringent constitutional amendment that would lower the cap that corporate and personal income taxes can be set from 7 percent to 5 percent. If passed by the legislature, the constitutional amendment would require a simple majority vote by North Carolina voters to be enacted. According to an ITEP analysis, this would result in nearly $9 billion in potential lost revenue with $7 billion of that alone from lost personal income tax revenue.
While the state is scheduled to reduce its flat personal income tax to 3.99 percent by 2025, the tax rate could reach as low as 2.49 percent if annual revenue triggers are reached over the next decade.
North Dakota
While the legislature is not in session this year, Gov. Burgum has called on lawmakers to eliminate the state’s income tax, echoing his calls from last year when he urged lawmakers to expand income tax cuts costing $358 million that were already signed into law. He also called for property tax cuts.
Ohio
In a recent statement, Gov. DeWine said that the state’s lower-than-expected tax revenue this year “is a direct result of a cut in taxes” after the legislature passed laws resulting in $3.1 billion in tax cuts that went into effect last July. The state has been deeply cutting taxes for decades. Currently, the state projects that revenue is about a half billion dollars less compared to this point last year.
Discussions of property tax cuts and reforms are expected to continue as lawmakers look to address increased property values. A push for improvements to and the enactment of tax credits for low- and middle-income families - like a refundable EITC, state-level Child Tax Credit and a property tax circuit breaker - continue to be discussed as important reforms that would strengthen families and reduce poverty.
Lawmakers have also proposed fully eliminating the state’s income tax and commercial activities tax. Meanwhile, While some lawmakers are seeking to expand the state’s school voucher program, known as EdChoice, to increase access to private schools, an recent analysis found that the nearly $1 billion program largely subsidizes families that already send their children to private schools.
Oklahoma
Governor Stitt signed a measure eliminating the state’s sales tax on groceries. The measure, a cut for all Oklahomans but one that will be felt most dramatically by families with modest incomes, will result in an estimated $411 million in state revenue loss.
This follows the governor’s renewed push for an income tax cut this session and a call to eliminate Oklahoma's income tax over time. Gov. Stitt held a pre-session special session (a week before the state’s standard legislative kickoff) that quickly adjourned with the House passing a 0.25 percent income tax cut and the Senate opting to not vote on any legislation.
Meanwhile, the state has a pending court proceeding regarding the treaties exempting tribal citizens from the state income tax.
Oregon
Oregon has wrapped up its short legislative session, but an initiative creating a constitutional amendment that would freeze property taxes for all seniors, regardless of income, has been filed and is currently collecting signatures to be placed on the November 2024 ballot.
Meanwhile, an initiative petition to create a universal basic income funded by an increase in corporate minimum taxes seems likely to be included on the November ballot. The measure would establish a 3 percent tax on corporations’ sales in Oregon above $25 million and distribute that money equally among Oregonians of all ages, which would be about $750 per person, according to the proponents of the measure.
Pennsylvania
In his budget address Gov. Shapiro included reforms for education funding, marijuana legalization, and increased public transit funding. The Pennsylvania Legislature is required to address the public school funding shortfall of almost $6.2 billon after state courts found the state's public school funding system (where underfunding was concentrated in the state's poorest districts) unconstitutional. Meanwhile, local lawmakers are pushing to reform the state’s uniformity clause that requires all state and local taxes to have the same percentage for all properties and taxpayers.
The Republican-controlled Senate approved a $3 billion tax cut plan that would cut income taxes and electric service taxes. The legislation would reduce the flat personal income tax rate from 3.07 percent to 2.8 percent and would eliminate the 4.4 percent gross receipts tax on the profits of electric utilities. While the legislation received support from eight Democrats, top Democrats said that it won’t pass the Democratic-controlled House.
Rhode Island
House and Senate finance committees both approved legislation allowing banks to elect single sales factor apportionment in response to demands by Rhode Island-based Citizens Bank. The legislation is estimated to reduce corporate income tax revenue by $7.5 million in fiscal year 2025 and by $15 million in fiscal year 2026, once fully implemented.
Meanwhile, Gov. McKee has proposed reducing the state’s corporate minimum tax and increasing the amount of retirement income that is tax exempt. He also proposed eliminating the state’s car tax, the tangible property tax for 75 percent of businesses, and creating new sales tax exemptions. Two dozen legislators backed a proposal for a new income tax bracket on millionaires. Funds from the 3 percent tax on taxable income above the million-dollar mark would be dedicated to schools, childcare, and transportation.
South Carolina
South Dakota
The Senate voted by a wide margin to maintain the temporary nature of last year’s reduction to the sales tax, rather than making the policy permanent. In 2023, the sales tax rate was reduced from 4.5 percent to 4.2 percent. It is set to return to its original rate in 2027.
Gov. Noem signed legislation that revises the maximum property tax levies for school districts for 2025 and modifies the eligibility requirements and increases exempt values for the property tax relief program for disabled veterans and their surviving spouses from $150,000 to $200,000.
Meanwhile, a citizen-led ballot initiative to repeal the sales tax on groceries is currently collecting signatures for a spot on the November ballot. Gov. Noem previously supported repealing the tax, but has withdrawn her support for the initiative due to concerns it would prohibit the state from receiving $20 million a year as part of a settlement from cigarette manufacturers for health care costs and deceptive trade practices.
Tennessee
Gov. Lee proposed cuts to the state's business franchise tax, one of the few progressive elements remaining in Tennessee's tax code. The House and Senate remain at odds over the details of a cut to the tax. Both versions propose removing property from the state’s franchise tax base, costing about $410 million annually. The Senate, with the support of Gov. Bill Lee, also proposed authorizing refunds for the last 3 years. The House proposes a smaller refund window and a public disclosure requirement for refund recipients.
Additional proposals to cap property tax increases and permanently repeal the state's grocery tax were also considered. The latter was proposed as part of a bill to enact worldwide combined reporting. In a separate approach, the Central Labor Council has been collecting signatures in a push to eliminate the state’s sales tax on groceries via the ballot.
Texas
No 2024 session.
Utah
Utah cut taxes for the fourth straight year after Gov. Cox signed into law a bill lowering the flat income tax rate for individuals and corporations from 4.65 to 4.55 percent. According to ITEP analysis, the bill will provide the wealthiest residents with the biggest benefits and cost the state around $180 million a year in revenue.
Vermont
Gov. Scott vetoed legislation that would raise property taxes to fund schools and levy new taxes on cloud-based software and short-term rentals. The legislation included a 13.8 percent, on average, increase in the property tax. In his opposition, Scott called on the state to reform education funding. The legislature will reconvene on June 17 to address this bill and other bills the governor vetoed. When passed, lawmakers anticipated that the Gov. Scott - who has come out in opposition to any tax increases - would veto the budget.
Meanwhile, Vermont became the first state in the nation to require fossil fuel companies to pay a share of the damage caused by climate change and for climate adaptation projects. Gov. Scott allowed the bill to become law without his signature.
The now vetoed compromise legislation took a different approach than the budget passed by the House, which would have raised $125 million through progressive revenue raisers by creating a new surtax on high-income earners, increasing corporate taxes and the state’s property transfer tax. Other bills that were discussed this session include a new tax on capital gains on assets above $10 million and the corporate-loophole-closing worldwide combined reporting.
Virginia
After rejecting the General Assembly’s budget and proposing an amendment to remove the Legislature’s expansion of the state sales tax to digital products (a provision originally proposed by Youngkin, but paired with an income tax cut that was not included), Gov. Youngkin signed budget legislation. The new legislation, hashed out in special session, leaves the state's tax policy mostly unchanged.
Youngkin also vetoed the following legislation: a bill that would have allowed all counties and cities to impose a 1 percent sales tax to fund school construction and renovation and a bill legalizing retail marijuana sales which included an 8 percent sales tax on recreational cannabis with an option for localities to levy an additional 2.5 percent tax.
Gov. Youngkin initially proposed reducing income tax rates by 12 percent, expanding and increasing the sales tax rate from 4.3 to 5.2 percent, and increasing the nonrefundable portion of the state's EITC. The budget proposals coming from the House and Senate appropriation committees largely rejected the governor's proposal. Instead, both redirect the $1 billion in income tax cuts to other priorities, such as public education. However, both chambers did include Gov. Youngkin’s proposal to expand the state’s sales tax to include digital goods.
Washington
The U.S. Supreme Court opted not to hear a challenge to Washington's progressive Capital Gains Excise Tax, which means Washington no longer has the most regressive tax code in the nation and can focus on further improvements to its still-upside-down tax structure. However, anti-tax advocates have collected enough signatures to place repeal of the measure on the ballot (alongside an initiative that would repeal the state's carbon tax). For the upcoming tax-related questions that will appear on the ballot this November, state law requires each of those to include information about impacts on state funding and services – for example, the question of whether to repeal the state’s Capital Gains Excise Tax will include the context that doing so means forgoing hundreds of millions of dollars for schools each year. But anti-tax interests are filing a lawsuit in an attempt to evade that requirement.
Moreover, this session, lawmakers enacted a citizen ballot initiative to ban state and local income taxes. A legal precedent already effectively prohibits state income tax, so the measure has no immediate effect, but could hamper efforts to address Washington’s severely regressive tax code in the future. Lawmakers also eliminated the state’s 37 percent tax on medical cannabis while retaining the tax for adult use. And with gas tax collections falling and transportation funding suffering, state legislators are looking into imposing a retail delivery fee that consumers would pay on products delivered to them.
West Virginia
Gov. Justice announced that the state has triggered an automatic personal income tax cut due to rising state revenues, which will reduce each bracket’s rate by 3 or 4 percent (details remain to be finalized). The legislature may also return for a special session in August to consider a proposed credit for child care or additional personal income tax cuts supported by the governor. This session, lawmakers also passed a bill that over three years will fully exempt Social Security income from the state’s personal income tax at a cost of about $38 million a year. Under current law, seniors with incomes below $100,000 (married) and $50,000 (single) already benefit from this tax break.
Wisconsin
Gov. Evers vetoed the three most expensive bills from the legislature’s tax cut package. The centerpiece of the package was an $800 million annual income tax cut that would have expanded the state’s second tax bracket of 4.4 percent to include higher incomes. Vetoed legislation also included an expanded retirement subtraction that would have allowed seniors to exempt up to $150,000 of retirement income from state income tax and an increase to the state’s credit for married filers. Collectively, the vetoed bills would have cost the state an annual revenue loss of $1.9 billion. Gov. Evers signed the fourth bill in the package which expanded the state’s childcare credit (a nonrefundable child and dependent care credit), but also urged legislators to invest further in childcare. Evers vetoed components of a similar tax cut proposal last year as well.
As session wrapped up, Gov. Evers vetoed a final tax cut attempt by Republican lawmakers, which would have collapsed the middle two income tax brackets into one extremely large bracket with a rate of 4.4 percent, effectively flattening most of the state's personal income tax structure. The bill also included an exemption of $150,000 of a couple's retirement income for those over 67. In total, this bill would have cost $3.2 billion in lost revenue over 2 years.
Wyoming
Gov. Gordon signed four bills that will cut property taxes by expanding a range of exemptions for eligible filers. The bills would, to varying degrees, either expand exemptions or broaden the state's property tax refund program. However, he was later censured over his veto of a separate property tax cut bill. The legislation would have allowed a 25 percent exemption to the first $2 million of a home's fair market value. A spokesperson for the governor noted that the veto "reflects the fact that he was not interested in giving 25 percent tax cuts to millionaires and billionaires, including those who just moved to Wyoming and were part of the very reason that longtime residents saw their assessments increase."
Property tax cuts remain a legislative priority for the Wyoming Caucus - a group comprised mainly of House Republicans. However, lawmakers in the House voted down a bill that would have eliminated property taxes for roughly 97 percent of residents and replaced the lost revenue by increasing the sales tax by 2 percentage points from 4 to 6 percent.