State Tax

Although the majority of 2022 state tax changes take effect at the start of the calendar year, some are implemented at the beginning of the fiscal year. Individual and corporate income tax changes usually take effect at the beginning of the calendar year to maintain policy consistency throughout the tax year, but sales and excise

Note: The following is Tax Foundation testimony regarding how Pennsylvania can mitigate challenges of inflation through structural tax reforms. It was presented, by request, to the Pennsylvania House Majority Policy Committee on June 21, 2022. Good morning, Chairman Causer and Members of the Committee, My name is Timothy Vermeer, and I am a Senior Policy

In addition to the federal estate tax, with a top rate of 40 percent, some states levy an additional state estate tax or state inheritance tax. Twelve states and the District of Columbia impose estate taxes and six impose state inheritance taxes. Maryland is the only state to impose both a state estate tax rate and a state

Key Findings Research almost invariably shows a negative relationship between income tax rates and gross domestic product (GDP). The mobility of higher-skilled and higher income earners in an open economy works against the effort of progressive state and local tax systems to achieve long-term redistribution of income. The likelihood of an employed head of household

Today’s map looks at which states levy a gross receipts tax, which is often considered one of the most economically damaging taxes. Shifting from state gross receipts taxes would represent a pro-growth change to make tax codes friendlier to businesses and consumers alike, which is especially necessary in an increasingly mobile economy. Gross receipts taxes are applied

Over the past decade, the state tax landscape has grown increasingly competitive as policymakers have sought to attract investment and promote economic opportunity and growth in their states. The past two years in particular have seen an extraordinary increase in tax reform efforts, given states’ strong revenue growth despite the pandemic and policymakers’ desire to

A decade after Kansas’s failed tax experiment, memories linger and continue to color the debate on tax reform and tax relief across the country, no matter how dissimilar other states’ plans are from the unbalanced and imprudent plan championed by then-Gov. Sam Brownback (R). The Kansas experience is so infamous that “what about Kansas?” is

As out-of-control inflation strains families’ budgets, lawmakers across the country are casting about for ways to respond. In Oklahoma, legislators have proposed sending taxpayers $75 checks in December ($150 for married couples) to help blunt the impact of higher prices. In one respect, it’s a drop in the bucket, with inflation costing the average household

Today’s map shows states’ rankings on the property tax component of our 2022 State Business Tax Climate Index. The Index’s property tax component evaluates state and local taxes on real and personal property, net worth, and asset transfers. The property tax component accounts for 14.4 percent of each state’s overall Index score. Property taxes matter to businesses for several reasons. First, businesses own a

Key Findings Sales taxes account for 29.52 percent of state tax revenue, but most sales taxes are imposed on narrow—and still-narrowing—bases, with average sales tax breadth of only 29.71 percent and a median of 35.72 percent. Sales tax bases range from 19.32 percent of personal income in Massachusetts to 93.89 percent in Hawaii; the Massachusetts

In more than a century of state income taxes, only four states have ever transitioned from a graduated-rate income tax to a flat tax. Another four may adopt legislation doing so this year. In what is already a year of significant bipartisan focus on tax relief, 2022 is also launching something of a flat tax

Today’s map examines another major component of our 2022 State Business Tax Climate Index: unemployment insurance (UI) taxes. Compared to individual, corporate, sales, and property taxes, UI taxes are less widely understood, but they have important implications for a state’s business climate. A state’s performance on the UI tax component accounts for 9.8 percent of that

This legislative session, the sales tax on food has garnered a great deal of attention in Kansas, with policymakers on both sides of the aisle proposing the removal of groceries from the sales tax base. While this issue has long been a subject of debate in Kansas, it has gained increased attention this year in

Tax reform has become a major focus for state legislatures this session, and Missouri lawmakers are tuned in to the action: after adjusting individual income tax triggers in 2021, the legislature is exploring further tax reform options. Senate Bill 739 would create an additional tax trigger mechanism for the individual income tax, while SB 701

Key Findings Exempting groceries from the sales tax base reduces economic efficiency without achieving its objective of enhancing tax progressivity. The poorest decile of households experiences 9 percent more sales tax liability with a grocery tax exemption than they would if groceries were taxed and the general rate were reduced commensurately. Grocery tax credits provide

After several rounds of negotiations, Georgia lawmakers enacted HB 1437 on April 4th. If certain financial conditions are met, this tax reform bill will consolidate the state’s six individual income tax brackets into one flat rate, ultimately reaching 4.99 percent over a number of years. The bill is awaiting action by the governor. As it

After weeks of closed-door deliberations between legislative leaders in Kentucky’s House and Senate, lawmakers on March 29 unveiled and quickly adopted a committee substitute to House Bill 8, which passed both chambers with a veto-proof supermajority that same day. The amended legislation uses tax triggers to reduce Kentucky’s individual income tax rate, with the possibility

Table of Contents Key Findings In calendar year 2022, state-local tax burdens are estimated at 11.2 percent of national product. Taxpayers remit taxes to both their home state and to other states, and about 20 percent of state tax revenue comes from nonresidents. Our tax burdens analysis accounts for this tax exporting. New Yorkers faced

Mississippi lawmakers entered the 2022 legislative session with the motivation and resources to implement income tax reductions and, despite stark contrasts in approach, concluded by delivering meaningful relief for taxpayers. The Mississippi Tax Freedom Act of 2022 (HB 531) began the session as an effort to totally repeal the individual income tax, a proposal we

States are flush with cash, but taxpayers’ purchasing power is being eroded by high inflation. It’s unsurprising that many policymakers have jumped at the chance to apply surpluses to meet the genuine needs of many residents—but good intentions do not always make for good policy.  Tax rebates, gas tax holidays, and other temporary tax expedients