New Hampshire

Illinois made big news in several tax and budget areas recently, including sending a graduated income tax amendment to voters in 2020, as well as legalizing and taxing cannabis and updating gas and cigarette taxes for infrastructure improvements. Connecticut made smaller waves with sales tax reforms, a plastic bag tax, and a progressive mansion tax. Property tax credits were proposed in both Maine and New Jersey. And Nevada extended a business tax to give teachers a raise. And our What We’re Reading section is brimming with good reads on how states are doing with recovering from the Great Recession, funding…

Consumption taxes (including general sales taxes, excise taxes on specific products, and gross receipts taxes) are an important revenue source for state and local governments. While five states lack state-level general sales taxes (Alaska, Delaware, Montana, New Hampshire, and Oregon), every state levies taxes on some types of consumption.

Income taxes vary considerably in their structure across states, though the best taxes are fine-tuned to taxpayers’ ability-to-pay.

Teachers in North Carolina and South Carolina are walking out and rallying this week for increased education funding, teacher and staff pay, and other improvements to benefit students—if you’re unsure why be sure to check out research on the teacher shortage and pay gap under “What We’re Reading” below. Meanwhile, budget debates have recently wrapped up in Indiana, Iowa, Massachusetts, New Hampshire, and Washington. And major tax debates are kicking into high gear in both Louisiana and Nebraska.

Tax and budget debates are now mostly complete in Alabama, Arkansas, and Colorado, but just starting or just getting interesting in several other states. Delaware and Massachusetts lawmakers, for example, are looking at progressive income tax increases on wealthy households, and New Hampshire may use a progressive tax on capital gains to simultaneously improve its upside-down tax code and invest in education. Nebraska and Texas, on the other hand, are also looking to improve school funding but plan to do so on the backs of low- and middle-income families through regressive sales tax increases. Fiscal debates are heating up in…

As of 2017, 11.5 million children in the United States were living in poverty. A national, fully-refundable Child Tax Credit (CTC) would effectively address persistently high child poverty rates at the national and state levels. The federal CTC in its current form falls short of achieving this goal due to its earnings requirement and lack of full refundability. Fortunately, states have options to make state-level improvements in the absence of federal policy change. A state-level CTC is a tool that states can employ to remedy inequalities created by the current structure of the federal CTC. State-level CTCs would significantly reduce…

Though a long winter and a rough start to spring weather have wreaked havoc in much of the country, lawmakers are off to a good start in the world of state fiscal policy so far. In the last week, a progressive revenue package was passed in the nick of time in NEW MEXICO, a service-sapping tax cut was vetoed in KANSAS, and a regressive and unsustainable tax shift was soundly defeated in NORTH DAKOTA. Meanwhile, gas tax updates are on the table in MAINE, MINNESOTA, and OHIO. And exemptions for feminine hygiene products and diapers were enacted in VIRGINIA and introduced in MISSOURI. 

There is significant room for improvement in state and local tax codes. State tax codes are filled with top-heavy exemptions and deductions and often fail to tax higher incomes at higher rates. States and localities have come to rely too heavily on regressive sales taxes that fail to reflect the modern economy. And overall tax collections are often inadequate in the short-run and unsustainable in the long-run. These types of shortcomings provide compelling reason to pursue state and local tax reforms to make these systems more equitable, adequate, and sustainable.

As another polar vortex heads for large swaths of the country, state tax debates this week were highly polarized in another way. Lawmakers and advocates in MICHIGAN, OHIO, OREGON, UTAH, and elsewhere fought to enact or improve state Earned Income Tax Credits to give a boost to low- and middle-income working families. But the opposite extreme was heavily represented as well, as others pushed for regressive tax cuts for wealthy individuals and corporations, including in KANSAS, NEBRASKA, NORTH DAKOTA, OHIO, UTAH, and WEST VIRGINIA. Even our “What We’re Reading” section has informative reading on how education funding policy continues to…

Happy Valentine’s Day to all lovers of quality research, sound fiscal policy, and progressive tax reforms! This week, some leaders in ARKANSAS displayed their infatuation with the rich by advancing regressive tax cuts, but others in the state are trying to show some love to low- and middle-income families instead. WISCONSIN lawmakers are devoted to tax reductions for the middle class but have not yet decided how to express those feelings. NEBRASKA legislators are playing the field, flirting with several very different property tax and school funding proposals. And VIRGINIA’s legislators and governor just decided to settle for a flawed…

State policymakers, voters, and observers have been reflecting on this year’s campaigns and looking ahead to how the policy opportunities in their states have shifted as a result. For example, Arkansas’s governor sees a fresh chance to slash income taxes on the state’s wealthiest residents, while the governor-elect of Illinois will be doing just the opposite, launching into a promised effort to shore up the state’s budget by asking the wealthy to pay more. New York and Virginia residents may end up with buyers’ remorse after Amazon accepted their combined $2 billion tax subsidy offers for its HQ2 project. And…

Tuesday’s elections shook up statehouses, governors’ offices, and tax laws in many states, and in this week’s Rundown we bring you the top 3 election state tax policy stories to emerge. First, voters in Kansas and other states sent a message that regressive tax cuts and supply-side economics have not succeeded and are not welcome among their state fiscal policies. Meanwhile, residents of many other states, including most notably Illinois, voted for representatives who reflect their preference for equitable, sustainable policies to improve their state economies through smart public investments and improve the lives of all residents through progressive tax structures. Lastly, while some states missed…

ITEP views this proposal as a sensible improvement, and one that is actually overdue, to the way the charitable deduction is administered. At the end of my remarks I will discuss a few ways that the regulation could be improved. But the core point I want to emphasize is that the general approach taken here, where quid pro quo rules are applied in a broad-based fashion to all significant state and local tax credits, is the correct one.

According to ITEP’s Tax Inequality Index, New Hampshire has the 16th most unfair state and local tax system in the country. Incomes are more unequal in New Hampshire after state and local taxes are collected than before.

The IRS recently proposed a commonsense improvement to the federal charitable deduction. If finalized, the regulation would prevent not just the newest workarounds to the $10,000 deduction for state and local taxes (SALT), but also a longer-running tax shelter abused by wealthy donors to private K-12 school voucher programs. ITEP has submitted official comments outlining four key recommendations related to the proposed regulation.

A proposed IRS regulation would eliminate a tax shelter for private school donors in twelve states by making a commonsense improvement to the federal tax deduction for charitable gifts. For years, some affluent taxpayers who donate to private K-12 school voucher programs have managed to turn a profit by claiming state tax credits and federal tax deductions that, taken together, are worth more than the amount donated. This practice could soon come to an end under the IRS’s broader goal of ending misuse of the charitable deduction by people seeking to dodge the federal SALT deduction cap.

The $2 trillion 2017 Tax Cuts and Jobs Act (TCJA) includes several provisions set to expire at the end of 2025. Now, GOP leaders have introduced a bill informally called “Tax Cuts 2.0” or “Tax Reform 2.0,” which would make the temporary provisions permanent. And they falsely claim that making these provisions permanent will benefit […]

Although most state legislatures are out of session during the summer, the pursuit of better fiscal policy has no "off-season." Here at ITEP, we've been revamping the State Rundown to bring you your favorite summary of state budget and tax news in the new-and-improved format you see here. Meanwhile, leaders in Massachusetts and New Jersey have been hard at work in recent weeks and are already looking ahead their next round of budget and tax debates. Lawmakers in many states are using their summer break to prepare for next year's discussions over how to implement online sales tax legislation. And…

On May 23, 2018, the IRS and Treasury Department announced that they “intend to propose regulations addressing the federal income tax treatment of certain payments made by taxpayers for which taxpayers receive a credit against their state and local taxes.” They made the announcement in response to new “workaround tax credits” enacted in New York […]

An updated version of this blog was published in April 2019. State tax policy can be a contentious topic, but in recent years there has been a remarkable level of agreement on one tax in particular: the gasoline tax. Increasingly, state lawmakers are deciding that outdated gas taxes need to be raised and reformed to fund infrastructure projects that are vital to their economies.

Many state governments are struggling to repair and expand their transportation infrastructure because they are attempting to cover the rising cost of asphalt, machinery, and other construction materials with fixed-rate gasoline taxes that are rarely increased.

While a lot of tax activities in the states this year have focused on figuring out the impact of federal tax changes on states' bottom lines and residents, there also have been unrelated efforts to cut state taxes or shift from personal income taxes to more regressive sales taxes.