Vermont

Including NCTI in state corporate tax law is an effective way to neutralize much of the tax avoidance that occurs when multinational companies artificially shift their profits into overseas tax havens.

The results are a mixed bag, with some states enacting promising policies that will improve tax equity and others going in the opposite direction.

ITEP tracks tax discussions in legislatures across the country and uses our unique data capacity to analyze the revenue, distributional, and racial and ethnic impacts of many of these proposals. State Tax Watch offers the latest news and movement from each state.

Most states are adopting a very cautious approach so far this year as legislators begin their sessions and governors make their annual addresses, thanks to ongoing economic uncertainty and federal retrenchment.

State governors are beginning to lay out their top priorities as legislatures reconvene in statehouses around the country.

As we kick off a new year, several states are facing revenue shortfalls. Some lawmakers are approaching the challenge with sustainable and equitable solutions.

With a little over a week left, some states are solidifying their spots on the tax policy “naughty or nice” list.

States are increasingly facing difficult choices as revenues stagnate and deficits come clearer into focus.

The 2025 federal tax law risks making 529 plans more costly for states by increasing tax avoidance and allowing wealthy families to use these funds for private and religious K-12 schools.

The progressivity of the federal tax code has been waning. State and local policymakers should respond by protecting their revenue bases, promoting equity, and safeguarding vulnerable communities from harmful budget cuts. 

Taxing the proceeds generated by wealth through a new Wealth Proceeds Tax is a simple way for states to raise billions in new revenue and improve the fairness of their tax systems.

Some states continue to hand out huge tax cuts to millionaires. The five largest tax cuts this year will cost states a total of $2.2 billion per year once fully implemented.

Nearly two-thirds of states now have an Earned Income Tax Credit (EITC). Momentum continues to build on these credits that boost low-paid workers’ incomes and offset some of the taxes they pay, helping lower-income families achieve greater economic security.

Child Tax Credits (CTCs) are effective tools to bolster the economic security of low- and middle-income families and position the next generation for success.

Federal policy choices on tariffs, taxes, and spending cuts will be deeply felt by all states, which will have less money available to fund key priorities. This year some states raised revenue to ensure that their coffers were well-funded, some proceeded with warranted caution, and many others passed large regressive tax cuts that pile on to the massive tax cuts the wealthiest just received under the federal megabill.

Refundable tax credits were a big part of state tax policy conversations this year. In 2025, nine states improved or created Child Tax Credits or Earned Income Tax Credits.

Sales tax holidays are often marketed as relief for everyday families, but they do little to address the deeper inequities of regressive sales taxes. In 2025, 18 states offer these holidays at a collective cost of $1.3 billion.

If instead of giving $117 billion to the richest 1 percent, that money had been evenly divided among all Americans, we'd each get $343 - or nearly $1,400 for a family of four.

President Trump has signed into law the tax and spending “megabill” that largely favors the richest taxpayers and provides working-class Americans with relatively small tax cuts that will in many cases be more than offset by Trump's tariffs.

As federal aid ends and economic uncertainty grows, local governments face tough budget choices. Now is the time for localities to protect vulnerable residents and build stronger, more equitable fiscal foundations.

The predominant feature of the tax and spending bill working its way through Congress is a massive tax cut for the richest 1 percent — a $114 billion benefit to the wealthiest people in the country in 2026 alone.

The Senate tax bill under debate right now would bring very large tax cuts to very high-income people. In total, the richest 1 percent would receive $114 billion in tax cuts next year alone. That would amount to nearly $61,000 for each of these affluent households.

As state legislative sessions come to a close, decisions on tax policy are being made. Several southern states have cut taxes, while the northeast is making some more measured reforms.