Updated October 2, 2023
More than one-third of states took steps to improve their tax systems this year by investing in people through refundable tax credits, and in a few notable cases by raising revenue from those most able to pay. These steps toward more equitable, progressive tax systems will help create more just and inclusive economies in those states.
Another third of states, however, lost ground, continuing a three-year (and, in some cases, decades long) trend of permanent tax cuts that overwhelmingly benefit high-income households and make tax codes less adequate and equitable. These cuts make it harder for states to create the strong, healthy, vibrant communities that we all desire and deserve.
ITEP is tracking these 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.
The legislature sent a bill to Gov. Kay Ivey’s desk that would reduce the sales tax on food from 4 to 2 percent as long as the state Education Trust Fund hits a growth target. The bill received unanimous approval in both the House and Senate. Gov. Ivey has also signed a one-time refundable tax rebate of $150 for single filers and $300 for joint filers. The legislation also allows for local reductions on food sales tax if local budgets grow at least 2 percent annually. Also, an amendment from the governor removes a $25 million annual cap on a bill that provides a tax exemption on overtime pay, and sunsets the exemption in 2025 instead of 2027. The House and Senate concurred with Gov. Ivey’s amendment.
Gov. Mike Dunleavy is expected to include a statewide sales tax as a part of his long-term budget plan. Legislators have proposed several revenue-generating options, including a 2 percent sales tax, an individual income tax on incomes over $200,000, and limiting the tax credit available to oil producers.
The state has been facing fiscal challenges in part due to overreliance on oil and gas revenue. Alaska does not have income, property or sales taxes, but localities collect sales taxes and include groceries in the base. Some localities, including Juneau, have considered eliminating their sales taxes on food in recent years. Alaska’s proposed budget is down $460 million dollars from FY23. Due to lower than expected oil prices, the budget calls for drawing funds from the Constitutional Budget Reserve of $245 million, and $20 million from the Statutory Budget Reserve.
Lawmakers in the Republican-controlled House rejected a Senate bill that would have ratcheted down the state's income tax when the state saw a revenue surplus. Gov. Hobbs signed a roughly $18 billion FY 2024 budget into law. While the budget did not address the state's school voucher program, which was expanded under the previous administration, it did include a one-time child tax rebate for children and their families.
Gov. Hobbs previously vetoed a bill that would have prohibited localities from taxing groceries, noting that, "it does nothing for the more than 800,000 Arizonans who use SNAP and WIC benefits for their groceries, as these constituents are already exempt from the tax." The governor is now in negotiations with Republican leaders to get a half-cent sales tax, known as Proposition 400, on the ballot.
Gov. Sarah Huckabee Sanders signed a bill that will cut the top personal income tax rate from 4.9 to 4.7 percent and cut the top corporate income tax rate from 5.3 to 5.1 percent. Despite being touted as a tax cut for middle-income households, the $124 million plan provides 80 percent of the benefit to the state's wealthiest 20 percent of Arkansans.
Meanwhile, the House passed a bill to phase out the state’s throwback rule that requires multi-state corporations based in Arkansas to pay taxes on revenue made from out-of-state sales that are not otherwise taxable. The repeal would reduce revenues by $74 million annually when fully implemented. Lawmakers also passed legislation that would increase the property tax homestead tax credit from $375 to $425. The governor has signed a school voucher bill that would move the state closer to education privatization, paying for private school tuition and home-schooling costs, and a bill that prohibits local governments from enacting income taxes. Although no localities currently have a local income tax in place, this type of state interference prevents local policymakers from being able to serve their communities.
The legislature has passed—and Gov. Gavin Newsom is expected to sign—a reauthorization of the state’s $330 million film and television tax credit. Additionally, unlike the prior version, the bill makes the credit refundable.
The Senate budget proposal rejects many cuts proposed by Gov. Newsom and proposes multiple changes to the state’s tax code. These include additional Low-Income Housing Tax credits; expanding the renter’s tax credit and making it refundable; expanding the California EITC; funding the already authorized Worker’s Tax Fairness Tax Credit; raising the corporate tax rate from 6.63 percent to 10.99 percent for income above $1.5 million and cutting it to 6.63 percent for income below $1.5 million; and automatically suspending Net Operating Loss credits while making the suspended credits both refundable and transferable. On net, the Senate estimates the tax changes will generate $2.8 billion in ongoing additional revenue.
Also, Gov. Newsom signed a bill regulating the oil industry. Although Newsom initially proposed a windfall profits tax on oil manufacturers, the final version instead mandates informative disclosures.
A bill that would increase the state EITC from 25 percent of the federal credit to 38 percent and move the state Child Tax Credit from a percentage of the federal to a fixed amount is on the governor's desk awaiting his signature. Meanwhile, this November, voters will get a chance to decide whether to adopt a 10-year plan to reduce residential and commercial property taxes after lawmakers approved the plan before the end of the 120-day session.
Gov. Jared Polis has clearly stated his intention to continually chip away at the state's income tax. His budget request also calls for reserving 15% of the state’s general fund for a rainy day fund. Colorado is projecting a $1.3 billion surplus, but the legislature is limited in how much it can spend due to TABOR.
Gov. Ned Lamont signed into law the state’s fiscal year 2024-2025 budget, which includes a cut to the two bottom income tax rates, an increase to the Earned Income Tax Credit (from 30.5 percent to 40 percent of the federal credit), and an expansion of the pension and annuity earnings benefits. They agreed not to expand the state's pass-through entity tax credit and opted to extend a temporary corporate tax surcharge through 2025. The plan notably requires a comprehensive tax gap analysis and plan to address it and substantially expands the state's tax incidence capacity.
The D.C. Tax Revision Commission is currently underway. The commission will recommend policy changes later this year. In 2021, DC added a tax on the wealthy and improved their existing EITC.
Delaware will levy a 15% sales tax on marijuana after state lawmakers approved bills legalizing possession and creating a tax and regulatory framework.
Ron DeSantis signed a $1.3 billion tax cut package that provides permanent sales tax exemption on diapers, baby products, and hygiene products along with multiple sales tax holidays for back-to-school, disaster preparedness and a three-month “Freedom Summer” that exempts many recreational activities from the sales tax. ENERGY STAR appliances and gas stoves were also included in a one-year sales tax exemption.
Gov. Brian Kemp signed into law a bill that provides residents with a state income tax refund of up to $500 for those who filed in both 2021 and 2022. The legislature passed a bill that enacts an excise tax of 2.84 cents per kilowatt hour used to charge electric vehicles. The state enacted a flat 5.49 percent income tax rate last year (effective in 2024) that will be reduced to 4.99 percent over time.
Gov. Josh Green signed a tax bill into law that doubles the state’s Earned Income Tax Credit from 20 percent to 40 percent of the federal credit, as well as increases the food excise tax credit and the maximum value of the Child and Dependent Care Credit.
The Senate Judiciary Committee gave preliminary approval to Senate Bill 925, which would enact a 1 percent tax every year on the net worth of individuals with assets in Hawaii of more than $20 million. Also, the governor has also expressed interest in taxing vacant lands as a way in which to combat rising housing costs.
Idaho will send a portion of surplus revenues and reappropriated sales tax revenues back to localities with the intention that they will cut property taxes. Local governments, however, are not mandated to use the additional funds to cut property taxes. The House of Representatives voted to override Gov. Brad Little's veto of legislation that would have cut property taxes. Education advocates argue that the bill will negatively impact education funding, while the governor called the bill a "hodgepodge of policy items intermingled with property tax relief." During a 2022 special session, lawmakers moved the state to a flat income tax rate and spent $500m on rebates, among other things.
Lawmakers chose not to extend the state's private school tax credit, which sunsets at the end of the year, by excluding it from the state budget. Though it could be revived through other legislation. The program allows for a 75 percent income tax credit on donations to a fund that provides private school vouchers and siphons state income tax dollars away from public education to private, often parochial schools. Lawmakers are also likely to debate a state Child Tax Credit and property tax credit this year, along with some small revenue raisers.
Gov. Eric Holcomb signed the state’s two-year budget, which will accelerate a cut to the state personal income tax and removes the previous triggers needed to lower the rate. The bill also expands the state voucher program to households making around $220,000 for a family of four. The budget will also recouple the state Earned Income Tax Credit to the current federal credit as opposed to a prior version of the federal credit that penalized households with more than three dependents.
Gov. Kim Reynolds signed a $100 million property tax cut that will require municipalities to use revenue growth over 3 percent to reduce their levy on property taxes. Municipalities can vote to increase the levy beyond the cap.
Previously, the legislature proposed a bill that would put a constitutional amendment before voters requiring a supermajority for any increases to personal or corporate tax rates. Gov. Reynolds also proposed cutting the state’s personal income tax to 2 percent and expressed her desire to take the rate to zero by the end of her term in 2026. This was on top of large tax cuts passed in 2022.
The Senate’s attempt to override Gov. Laura Kelly’s veto of a bill that would have implemented a 5.15 percent flat income tax has failed. In addition to consolidating Kansas’ progressive income tax brackets into a single rate, the bill would have also cut taxes on Social Security for higher-income Kansans, provide corporate tax cuts and property tax cuts, increase the state’s standard deduction, and accelerate the elimination of the sales tax on groceries. Gov. Kelly is instead calling for a one-time tax rebate of $450 for single filers and $900 for married filers instead of an expensive and permanent income tax cut.
Gov. Kelly has vetoed a bill that would have provided $80 million in various tax cuts. While Gov. Kelly expressed support for certain line items, such as personal property tax reforms, she criticized many of the tax breaks including credits for anti-abortion pregnancy centers and tax breaks for health clubs.
Gov. Andy Beshear signed a major tax cut (HB1) into law despite near universal opposition from Democratic lawmakers. As a result, Kentucky’s income tax rate will drop from 4.5 percent to 4.0 percent. This comes after last year's HB8 cut the income tax rate from 5 to 4.5 percent with a phasedown. Issues likely to be discussed include neo-vouchers, sales tax exemptions, and local tax policy changes. The legislature also passed, and Gov. Beshear signed into law, a bill phasing out the property tax on bourbon barrels.
Gov. John Bel Edwards vetoed a bill that would have phased out the state corporate franchise tax. It was tied to legislation that reduced the state’s Quality Jobs tax credit to compensate for the lost revenue but would have still resulted in a $140 million loss over five years.
The House Ways and Means Committee shelved a bill that would have eliminated the state personal income tax. The bill proposed replacing the billions in revenue from Louisiana’s income tax with a higher state sales tax, lower homestead exemption, a phase-out of certain business tax breaks, and by shifting more responsibility of funding public schools to local governments.
Maine Gov. Janet Mills signed the state budget into effect, and it includes making the Dependent Exemption Tax Credit refundable and indexing it to inflation; establishing a paid family medical leave program that will be funded by a payroll tax of up to 1 percent; and increasing the income tax pension deduction.
Gov. Wes Moore signed legislation that permanently extends and expands the state’s EITC and broadens eligibility for the state CTC. The legislation permanently removes the $530 cap for the EITC for adults without qualifying children. In addition, the broadened CTC allows individuals earning less than $15,000 per year to claim a credit of $500 per child under the age of six. Previously, the CTC was limited to children under the age of 17 with a disability with household AGI under $6,000 per year.
Meanwhile, Maryland's tax on digital advertising on tech giants such as Amazon, Facebook, Google and Microsoft is making its way through the courts. And lawmakers have held a hearing on a corporate tax transparency proposal that would require publicly traded corporations to disclose on their state tax returns their effective tax rate, how the rate was calculated, and the impact of any credits, deductions, and adjustments.
The Senate unveiled their tax plan that, with one exception, only includes targeted tax cuts for low- and moderate-income households. (The exception is an increase in the estate tax threshold from $1 million to $2 million.)
Lawmakers in the House previously released a $654 million tax cut plan that largely mirrors the governor's proposal. Several additions also include reducing the income threshold that the estate tax would start at from $3 million to $2 million, increasing the EITC to 40 percent, moving the corporate income tax to single-sales factor apportionment, and eliminating the revenue surplus cap.
Gov. Maura Healey's tax plan included a $600 child and dependent tax credit, an increase to the estate tax threshold from $1 million to $3 million, and a cut to the short-term capital gains rate from 12 to 5 percent. The legislature is focused on 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.
Gov. Gretchen Whitmer signed into law a nearly $1 billion dollar tax cut. The law will increase the state’s EITC from 6 percent to 30 percent of the federal EITC. It will also gradually phase out the limits on the amount of retirement and pension income that can be deducted from taxable income, as well as expand complete retirement income exemptions from taxable income for specific public employees. Attorney General Dana Nessel has stated that Michigan’s income tax trigger, which was put on the books in 2015 and is set to trigger this year, will be temporary. The state’s income tax rate is expected to drop to 4.05 percent from its current 4.25 percent for one year only.
Gov. Tim Waltz has signed legislation that raises new revenue from the highest-income earners and corporations through a global intangible low-taxed income (GILTI) tax, makes changes to the state’s standard and itemized deductions phaseout, and includes a 1 percent tax on higher-earner investment income. The bill includes a new Child Tax Credit of $1,750 per child that begins to phase out after $35,000 of income for married households. The policy is expected to reduce the state’s child poverty rate by one-third.
The bill also restructures the state’s Working Family Credit (EITC), boosts the renter's income tax credit, and expands credits to ITIN filers. It provides one-time rebates of $260 for single filers and $520 for married filers with additional funds for up to three dependents and expands the Social Security subtraction. Additional bills will index the state’s gas tax to inflation and create a statewide Paid Family Medical Leave program funded through a new payroll tax.
Gov. Walz also signed legislation legalizing adult-use cannabis. Recreational cannabis will be subject to a 10 percent gross receipts tax, the state general sales tax of 6.875 percent and any additional local sales tax. An additional $130 million in new revenue is expected annually in fiscal year 2027.
Due to lack of agreement between House and Senate members, neither tax cuts nor rebates passed this session. Many lawmakers seemed hesitant to make further cuts on top of those that were put in place just last year.
In his State of the State address, Gov. Tate Reeves again reiterated his desire to eliminate the state's income tax. He also wanted to create a child and dependent care tax credit and a deduction for child care supplies. Speaker Gunn also proposed a range of income tax cuts short of full elimination, which include speeding up the existing income tax cut phase-in and reducing the top income tax bracket from 3.75 to 3.5 percent. Alternatively, the Lt. Governor promoted an income tax rebate plan and a reduction to the state's 7 percent grocery tax, and a bill to make this reduction has now been introduced.
Lawmakers have passed—and the governor will most likely sign—a bill to exempt from taxation the Social Security and public pension benefits of high-income seniors. Meanwhile, lawmakers have authorized a film tax credit similar to a previous credit that expired in 2013. Capped at $13 million per year, the credit will flow exclusively to corporations and hopes to attract more film sets to the state.
The Senate is writing a significantly more expansive budget than the House budget with additions of almost $2 billion. The House passed HB 816, which would authorize about $1 billion in total cuts. Focused on the rich, the bill would immediately cut the state’s corporate income tax rate from 4 percent to 2 percent, and lower the state’s top personal income tax rate from 4.95 percent to 4.5 percent. The Senate advanced dual sales tax exemptions. One measure would exempt firearms and ammunition, the other diapers and feminine hygiene products.
Gov. Greg Gianforte recently signed into law a bill that will eliminate the list of countries that are considered tax havens from statutes governing the "water's-edge" corporate filing method. Under current law, C corporations have the option of selecting the "water's-edge" filing method—which allows them to exclude income from outside the United States for income apportionment purposes—except for income earned in countries deemed tax havens.
The governor also signed a package of tax bills into law that are being touted as the "largest tax cut in state history." The changes include a reduction of the top marginal tax rate, an increase to the state EITC, one-time individual and property tax rebates, and a shift in the way capital gains is taxed. A key piece of Gov. Gianforte's budget plan that would have created a $1,200 child tax credit was tabled in the House Appropriations Committee.
The legislature passed massive income tax cuts which are expected to be signed by Gov. Jim Pillen. The bill, LB754, will eventually cut the state’s top individual income tax rate from 6.84 percent to 3.99 percent with the first cut starting immediately. Those in the second to last bracket will additionally eventually receive a tax cut.
While the bill also cuts corporate tax rates, adds exemptions for retirees, and creates a refundable credit for child care expenses, the vast majority of its cost is in the cuts to personal income tax rates. The credit will help some families with children, but it only represents about 2 percent of the total cost of the package once fully implemented.
➜ More details from Open Sky Policy Institute: Major tax and education plans would quickly drain flush state coffers
Senate Bill 394 would increase property taxes by 10 cents for every $100 dollars in assessed property value. It is not based on the market value of homes, rather it is tied to the assessed value of the home. Revenue will be used for more educational funding. Lawmakers also are trying to pass Assembly Bill 448 which would change an exemption to the tax when property owners shift real estate to an affiliate or subsidiary. If passed, the tax still applies if the property is transferred to a business entity that was “formed for the purpose of avoiding those taxes.”
Gov. Joe Lombardo called for corporate tax cuts and use of federal pandemic aid to fund a one-year gas tax suspension and state employee pay raises, among other items, in his first State of the State address. The state has strict institutional barriers in place that limit many progressive tax changes.
The legislature passed its two-year budget, which includes an accelerated repeal of the state’s Interest and Dividends Tax. The tax was scheduled to phase out by 2027 but is now scheduled for 2025. The tax collects a portion of income generated from wealth ownership, including corporate stocks or debt that pays interest.
Gov. Phil Murphy approved the state’s budget, which includes property tax cuts for seniors and a doubling of the state Child Tax Credit to $1,000. He also signed legislation that overhauls the method for apportioning taxable income on unitary combined reporting groups and increases the exemption for global intangible low-taxed income (GILTI) from 50 percent to 95 percent, among other corporate tax changes.
Gov. Murphy and leaders in the statehouse reached an agreement on a proposal to provide seniors with incomes up to $500,000 a $6,500 property tax cut beginning in 2026. The plan, like the one before it, however, still does not include renters.
Gov. Michelle Lujan Grisham signed an omnibus tax bill into law, which includes $500 rebates, an increase to the state CTC, and an expansion of the film tax credit. The governor, however, vetoed an alcohol tax increase and the proposed cut to the gross receipts tax.
Lawmakers have agreed to expand the state’s Child Tax Credit – known as the Empire State Child Credit – to families with children under the age of 4 who were previously excluded from the benefit.
Lawmakers have introduced proposals to raise taxes on the state’s richest households, increasing the rate on income over $5 million and below $25 million from 10.3 percent to 10.8 percent and the rate on income over $25 million from 10.9 percent to 11.4 percent. Gov. Kathy Hochul's budget proposal includes a payroll tax on part of the state to bolster funding for the New York City subway system and an extension of an existing tax on large corporations, which was otherwise scheduled to expire at the end of 2023.
Gov. Roy Cooper declared a state of emergency for public education due to the ongoing support for cuts to personal income taxes – that will ultimately reduce revenue for public investment in schools – and calls for expansion of private school vouchers that are available to families, including millionaires.
The Senate’s two-year budget plan quickly passed and now House and Senate lawmakers will negotiate a final deal. The Senate’s plan speeds up cuts to individual income taxes, bringing the tax rate to 3.99 percent by 2025 and to 2.49 percent by 2030 (the current tax rate is set at 4.75 percent, with a phasedown to 3.99 percent by 2027). These cuts are larger than those proposed under the House bill. Teacher pay is being pitted against tax cuts skewed toward the wealthy. The Senate plan would raise teacher pay by an average of 4.5 percent, compared to a 10 and 18 percent raise in the House and governor’s plan, respectively.
The legislature has approved tax cut legislation that totals about $515 million. It includes a mix of income and property tax cuts. Income tax cuts make up nearly 70 percent of the total cost. The income tax cuts would consolidate the state's five tax brackets into three by eliminating the tax for single filers and joint filers earning $44,725 and $74,750, respectively, applying a 1.95 percent tax for income between $44,725 and $225,975 for single filers and between $74,750 and $275,100 for joint filers, and applying a 2.5 percent tax on income above those thresholds. All income tax brackets will be at a lower rate than current law, and the state’s current top rate is 2.9 percent. The remaining tax cut from the legislation will go towards $500 property tax credits for primary residences and expanding eligibility for the Homestead Property Tax Credit. Gov. Doug Burgum has said that he plans to sign the legislation.
Gov. Burgum signed legislation that would exempt property used to construct or expand coal processing facilities from the state’s sales and use taxes. He signed off on exempting the first one million tons of coal used per year as feedstock by those facilities from the state severance tax. And, the governor signed a bill that exempts military pay from state income tax for active duty, National Guard and Reserve members.
The Senate also passed legislation that would give parents with household incomes below $120,000 a tax credit for day care costs. The credit would be the greater of 40 percent of the credit allowed under the federal Child and Dependent Care Credit program or 10 percent of the credit allowed under the federal Child Tax Credit.
Gov. Mike DeWine signed the state’s budget, which includes condensing the state’s income tax brackets that provides top-heavy cuts to higher-income households. DeWine also issued line-item vetoes on several tax provisions, including an extension of the state’s sales tax holiday to a minimum of two weeks and a provision allowing the state tax commissioner to set personal income tax rates and brackets.
Gov. Kevin Stitt was disappointed that their regular session didn’t include any passage of significant cuts to the personal income tax and grocery tax, so he has discussed calling a special session to focus on tax cuts. Lawmakers have reached an initial agreement on the state’s budget. It eliminates the state’s franchise tax in future years and includes a tax credit for people who care for a family member. The budget appropriates $13 billion and has already passed the House and Senate Joint Committees on Appropriations. Lawmakers have indicated they will come back to the Capitol in June if the governor vetoes any of the adopted bills.
The legislature previously agreed on a package that, despite criticism from the state’s Tax Commission, expands tax credits for use outside of the public education system. The credit for private school tuition will increase to $7,500 per child in households making less than $75,000 annually. Additionally, parents of homeschool students can claim a $1,000 tax credit per child for online curricula, tutoring, instructional materials, and other qualified expenses. These credits go into effect in January 2024.
➜ More from the Oklahoma Policy Institute: The needs of everyday Oklahomans outweigh tax cuts that benefit the wealthy
The legislature passed legislation that creates a $1,000 Child Tax Credit available to children under the age of 6, capped at five qualifying children. Households earning $25,000 would be eligible for the full value of the credit, and it would be phased out at $30,000. The credit would be available through the end of 2029. The legislation passed nearly unanimously in both chambers and heads to Gov. Tina Kotek’s desk for further action.
The House overwhelmingly voted to increase the state’s property tax and rent subsidy for seniors and people with disabilities. The legislation would increase the maximum amount of the subsidy and increase the income cap for eligibility, which was last updated in 2007. The House Finance Committee also advanced legislation that would create a state-level Earned Income Tax Credit set at 25 percent of the federal credit.
The Senate Finance Committee advanced legislation to accelerate the reduction of the state’s corporate income tax. The legislation, which passed with bipartisan support, would reduce the tax to 4.99 percent in 2026 while the current schedule for the tax cut would reach the same rate in 2031.
Gov. Josh Shapiro unveiled his first budget proposal, which includes increasing the income threshold for a state property tax and rent rebate program for older adults. It also includes a tax credit over three years for anyone who earns or moves to the state with a teaching, nursing, or law enforcement certification. Fair Share Tax legislation would raise $2.8 billion in new tax revenue by decreasing the personal income tax on wages to 2.8% from 3.07% and increasing to 6.5% the income tax on passive income from things like net profits, dividends, and gains through estates and trusts.
Senate leadership is supporting legislation to create a statewide tangible property tax exemption of $100,000, which would eliminate the tax for an estimated 85 percent of businesses in the state. Gov. Dan McKee proposed a $100 million tax cut plan as part of his budget proposal. The proposal includes reducing the state’s sales and corporate minimum tax, stopping the gas tax increase, providing energy bill rebates, and ending the litter tax for businesses. Some lawmakers continue to push to create a new tax bracket for the top 1 percent of earners. And the Senate President has noted that a state Child Tax Credit is a top priority.
Gov. Henry McMaster urged lawmakers to drop the state’s income tax rates from 6.5 percent to 6.4 percent faster than intended under the state's scheduled phasedown. In 2022, the state condensed its graduated income tax into two brackets and cut rates. Lawmakers are also considering eliminating taxes on menstral products.
Gov. Kristi Noem said she would not support a measure that would exempt groceries from the state’s sales tax due to provisions that would also prevent the state from taxing tobacco and medical marijuana. The measure is currently seeking signatures to be placed on the 2024 election ballot. Exempting groceries from the sales tax was a key priority for Noem during the 2023 legislative session, but the effort ultimately failed.
Gov. Bill Lee made extending the one-month grocery tax exemption by three additional months a priority in his 2023 State of the State address.
Gov. Greg Abbott called for a second special session on property tax cuts after House and Senate legislators could not reach an agreement. The legislature continues to debate competing proposals on property tax cuts. The Senate is pushing to increase the state homestead exemption to $100,000 while the House advocates for lower rates.
Previously, the Senate passed a new property tax bill that includes $18 billion in homestead exemptions and business franchise tax exemptions (doubling the latter to nearly $2.5 million). The ultimate compromise will require voter approval via changes to the state’s constitution. The governor has reiterated his support for the House legislation which does not include changes to the homestead exemption.
Gov. Spencer Cox signed legislation, estimated to cost $400 million, that would reduce both personal and corporate income taxes from 4.85 percent to 4.65 percent, increase the state’s nonrefundable EITC from 15 percent to 20 percent, allow taxpayers with a newborn child to claim the $1,750 personal exemption twice within the year of the child’s birth, and remove the state’s sales tax on food and ingredients in 2025 if voters approve a constitutional amendment that would eliminate an earmark that income tax revenues be used specifically to fund education.
Gov. Phil Scott vetoed legislation that would increase funding for early childhood education and extend childcare subsidies to families up to 575 percent of the federal poverty level, which would be partially funded by a new 0.44 percent payroll tax. While the governor supported increasing childcare funding in his proposed budget, he opposed the legislation due to the new payroll tax. The Vermont legislature is scheduled to reconvene on June 20 to consider action on legislation that the governor vetoed, including the state budget that also received a veto.
Gov. Scott's budget proposal includes proposals to increase the Earned Income Tax Credit from 38 to 45 percent of the federal credit, eliminate taxes on military pensions and increase the state's Social Security tax exemption. Lawmakers are likely to continue to consider recommendations from the state's Tax Structure Commission that released a final report in 2021. Revenue has been exceeding expectations. Among other things, lawmakers enacted a Child Tax Credit in 2022 that provides a $1,000 credit for children under 6 that phases out at higher incomes. Vermont Republicans are also pursuing a reduction in property taxes.
The legislature could enter a special session as Gov. Glenn Youngkin continues to pursue tax cuts in the state’s budget negotiations. Gov. Youngkin has proposed cuts to the state's corporate and individual income taxes as lawmakers continue to negotiate over the annual revisions to the plan, which would be in place through June 2024.
Gov. Jay Inslee signed legislation that expands the Working Families Tax Credit to those who are married but file their taxes separately and allows retroactive refunds for up to three years for those who previously qualified for the credit but did not claim it. The legislature sent legislation to Gov. Inslee’s desk that would expand county-based income limits for property tax exemptions for seniors and individuals with disabilities.
Revenue collections from the state's new capital gains tax, which recently went into effect after the state’s Supreme Court ruling, are far exceeding expectations as the state estimates it will collect approximately $849 million in its first year, which is $601 million more than earlier projections. Revenue from the tax is used for K-12 and early childhood education, and any revenue above $500 million is allocated to one-time school construction projects.
Gov. Jim Justice signed into law an $800 million dollar tax cut, which includes a roughly 21 percent cut in the personal income tax, rebates for the state’s tax on vehicles, and partial rebates for personal property taxes paid by some smaller businesses. The new law includes automatic triggers for further personal income tax cuts which would eventually eliminate the personal income tax entirely. Gov. Jim Justice originally proposed a 50 percent cut in the state’s personal income tax. The state expects a $1.8 billion surplus this fiscal year. In late 2022, Amendment 2 failed. If enacted, it would have authorized the legislature to reduce or eliminate tangible personal property taxes.
➜ More from the West Virginia Center on Budget & Policy: Senate Tax Cut Plan Not What Was Promised to Average West Virginians, Poses Significant Risks of Future Tax Increases or Budget Cuts
Gov. Tony Evers used his partial veto power to reject tax rate cuts for the state’s two highest income brackets while allowing cuts to the bottom two brackets to pass. The original package passed by the Republican-controlled legislature would have cost the state $3.5 billion over a biennium. Reducing only the bottom two brackets will result in $175 million in lost revenue. The governor signed a bill that increases shared revenue with local governments and allows the city and county of Milwaukee to raise sales taxes. He also signed legislation that eliminates the state personal property tax.
Gov. Mark Gordon signed a joint resolution to place an amendment before voters that would create a new class for residential real property and allow state lawmakers to cut residential property tax assessments. A cigarette tax increase may also be considered. Some lawmakers are considering taking a comprehensive look at the state's tax policies over the next few years (similar to what was done in 2000).