January 23, 2024

State Tax Watch 2024

Updated May 20, 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.

Alabama Illinois Montana Rhode Island
Alaska Indiana Nebraska South Carolina
Arizona Iowa Nevada South Dakota
Arkansas Kansas New Hampshire Tennessee
California Kentucky New Jersey Texas
Colorado Louisiana New Mexico Utah
Connecticut Maine New York Vermont
Delaware Maryland North Carolina Virginia
District of Columbia Massachusetts North Dakota Washington
Florida Michigan Ohio West Virginia
Georgia Minnesota Oklahoma Wisconsin
Hawaii Mississippi Oregon Wyoming
Idaho Missouri Pennsylvania

 

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.

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Alaska

Lawmakers are considering tripling the state's property tax exemption for seniors, the disabled, and widows. The plan, which comes just before the end of regular session, would raise the exemption from $150,000 to $450,000 and cost as much as $200 million per year to fund.

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Arizona

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.

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Arkansas

The legislature has adjourned for the session after sending a budget to the governor. However, some legislators are already discussing a special session to debate measures regulating cryptocurrencies, and potentially other issues.

Earlier this year, Gov. Sanders stated her intention of pushing for additional personal income tax cuts. If approved, this would be Arkansas' fourth income tax cut in less than two years.

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California

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 proposals for new revenue. Meanwhile, anti-tax activists have created a ballot initiative designed to make it more difficult to create or raise a tax and limit to ability of localities to collect special taxes. To that end, the state Supreme Court heard oral arguments on a ballot measure designed to sharply limit state and local governments' authority to raise taxes and fees by making any change subject to a two-thirds popular vote. The sweeping measure would be retroactive and require several taxes that already received majority support from voters to be voted on again with a higher threshold. The justices appeared divided on the case, but open to waiting to rule until after the vote.

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Colorado

Lawmakers announced a tax deal with Gov. Polis. The plan, which is expected to reduce child poverty, includes a new credit that will act as a more robust Child Tax Credit and increases to the state’s Earned Income Tax Credit. 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.

The bill to increase the state Earned Income Tax Credit from 38 to 50 percent of the federal credit in 2024 was signed by Gov. Polis. The rate will then drop to 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 also combines two childcare credits into one credit and modifies requirements for corporations filing combined returns.

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.

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.

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Connecticut

After cutting income tax rates for low- and middle-income households and increasing the state's Earned Income Tax Credit in 2023, Gov. Lamont has since backed off plans for further cuts. State revenue reports show declining tax collections.

However, a push for a state child tax credit is gaining steam. The credit would provide $600 a year per child and is projected to impact 75 percent of families in the state. Lawmakers are also discussing policies to raise revenue, including a surcharge on capital gains income and a higher top income tax rate.

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D.C.

Mayor Bowser released her 2025 budget proposal which includes freezing the scheduled Earned Income Tax Credit 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 is still working through its comprehensive recommendations. Items initially expected to be considered include 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.

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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.

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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.

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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.

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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.

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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.

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Illinois

Gov. Pritzker released his annual budget which includes a number of tax policy proposals. Some are intended to soften the blow of the state’s projected $900 million revenue shortfall, such as the increase to the sports wagering tax from 15 to 35 percent, continued limit on the Corporate Net Operating Loss Deduction, and the cap on the sales tax retailers’ discount. Gov. Pritzker also proposed elimination of the state’s 1 percent sales tax on groceries and the creation of a small credit for children (essentially a targeted boost to the state’s EITC) geared toward families with young children under three.

Meanwhile, lawmakers and advocates alike continue to work to enact a robust Child Tax Credit and make the case for new revenue through higher taxes on the wealthy and closing corporate loopholes. Lawmakers are also considering 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.

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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.

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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.

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Kansas

Tax cut proposals remain in flux as the Senate failed to override Gov. Kelly’s veto of the legislature’s most recent tax plan – marking the third time the legislature failed to override the governor’s veto of a tax plan in two years. The legislature then promptly passed another tax cut reminiscent of the recently vetoed proposal. This plan would lower the state’s personal income tax rates slightly less than the recently vetoed plan but would still condense to a two-bracket structure. It would also fully exempt Social Security income from tax, increase the standard deduction and personal exemption, increase the homestead exemption, and lower the mill levy to public schools. The bill is expected to cost $2.3 billion over five years, and lawmakers on both sides of the aisle believe the cost will be a non-starter for Gov. Kelly. With the legislative session ending, lawmakers expect to be called back for a special session to finalize a tax bill.

Of the tax packages vetoed by Gov. Laura Kelly, the first included a 5.25 percent flat personal income tax, a full Social Security exemption, a $100,000 homestead exemption, and inflationary increases to the personal exemption and standard deduction, among other things. 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 package (expected to cost $1.57 billion over three years) would have flattened income tax brackets and cuts rates, but would not have enacted a flat tax. It also would have fully exempted Social Security income from tax, increased the state’s standard deduction and personal exemption, created a new dependent exemption, increased the homestead exemption, and reduced the property tax millage for schools. An ITEP analysis found that 55 percent of the cut would flow to the top 20 percent of Kansan households. Upon her recent veto, Gov. Kelly announced a new proposal that would preserve many features of the latest plan, but cost roughly $90 million less.

Over the course of session, other tax plans have also been introduced:

• One proposal, unanimously passed by the House but stopped in the Senate, would have eliminated the bottom tax bracket of 3.1 percent, reduce the second- and third-income tax brackets by .05 percent, phase-out income taxes on Social Security income, and cut property taxes.

• A separate flat tax plan in the Senate would have created a flat rate of 5.7 percent in 2024 that would drop to 5.45 percent by 2029. The plan would also increase personal exemptions and exempt additional Social Security income from tax. Even with an increase to the personal exemption, this flat tax proposal would cost $650 million a year when fully phased in and give 40 percent of its benefits to households in the top 20 percent of earners.

• An early bipartisan tax plan, supported by Gov. Kelly, would exempt all Social Security benefits from the state income tax, increase the homestead exemption to the first $100,000 of property value, and immediately eliminate the state's grocery tax that is currently phasing out. Rather than instituting a flat tax, this plan would increase the state’s standard deduction and increase the state's nonrefundable child care credit (or child and dependent care credit), among other changes.

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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.

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Louisiana

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.

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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.

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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.

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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.

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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.

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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.

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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.

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Missouri

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.

The House passed a bill that would fully eliminate the state's corporate income tax, currently at 4 percent, by 2028. Other issues that continue to be discussed are grocery tax elimination, reductions in personal property taxes for vehicles, and 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.

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Montana

The state's legislature is not in session this year, but gearing up for next year Gov. Gianforte made appointments to a task force that will consider recommendations for cutting property taxes.

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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 which Pillen is touring the state in an attempt to build support.

Gov. Pillen’s property tax cut plan started as a large sales tax increase and expansion combined with strict local spending limits and reallocation of existing property tax credits with a goal of a 40% property tax reduction. It was pared back slowly to become a different set of property tax reduction mechanisms funded by a mix of smaller sales and excise tax revenues (pop, candy, pet grooming, cigarettes, e-cigarettes, lottery tickets, etc.) and a Maryland-style digital ad tax, plus an EITC increase.

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.

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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.

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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.

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New Jersey

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. The package of bills are a part of an eight-year Transportation Trust Fund reauthorization bill, which is mandated by 2016 law that requires a "steady stream of revenue" to support the program.

Gov. Murphy's budget proposal included a corporate business tax of 11.5 percent on companies with more than $10 million in profits. The plan comes just months after a similar business surcharge expired at the end of 2023. The revenue will help fund the state's transit system which has announced plans to raise fares by 15 percent on July 1. Business lobbyists proposed that, instead of funding New Jersey Transit with corporate tax increases, the state use revenue from the sales tax to fill the gap (via a rate increase from 6.625 to 7 percent).

Also included in the governor's initial budget plan were continued funds for the state's property tax ANCHOR program and property tax cuts for seniors, another payment for public-worker pensions, an increase to the state's school aid formula, and an end to the state's sales tax holiday. Murphy's budget maintains the state's EITC, CTC, and CDCC.

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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.

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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.

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.

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North Carolina

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.

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.

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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.

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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 Ohio Office of Budget and Management projects that state 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.

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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.

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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.

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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.

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Rhode Island

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.

Meanwhile, two dozen legislators have backed a proposal for a new income tax bracket on millionaires. Funds from the three percent tax on taxable income above the million-dollar mark would be dedicated to schools, childcare, and transportation.

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South Carolina

Upon the close of the state’s legislative session, there are a couple of tax-related changes worth noting: the elimination of the sales tax on feminine hygiene products (currently on the governor’s desk) and the defeat of a school voucher bill that would have expanded access to wealthy households.

In an address to the state earlier this year, Gov. McMaster expressed interest in speeding up the remaining phase-down to the state's personal income tax (to 6 percent) if future revenues make it possible. State senators also explored acceleration of the state’s personal income tax cut that was passed in 2022 by implementing a top income tax rate of 6.2 percent in 2024 as opposed to the 6.3 percent rate under current law.

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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.

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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.

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Texas

No 2024 session.

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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.

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Vermont

Lawmakers passed a budget that is expected to be vetoed by Gov. Scott, who has come out in opposition to any tax increases. The legislation aims to raise statewide property tax rates by 13.8 percent, on average, to fund the rising cost of education. It also includes the repeal of the state’s sales tax exemption for pre-written software and a 3 percent surcharge on short-term rentals, estimated to raise $26 million for the education fund.

The compromise legislation takes 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.

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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.

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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).

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 eliminated the state’s 37 percent tax on medical cannabis while retaining the tax for adult use.

A proposal to tax the wealth of high net worth individuals continues to make waves as well.

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West Virginia

Lawmakers 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.

Faced with declining revenue, Gov. Justice proposed a set of tax cuts aimed at seniors and families with children (increasing caps on the state's Social Security exemption, expanding property tax credits, and creating a nonrefundable Child and Dependent Care Credit for child care expenses). Meanwhile, legislative leaders have proposed special tax exemptions for physicians new to the state. The possibility of a special session is being discussed.

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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.

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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.

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