Tax Policy and the Coronavirus

Updated April 2 at 6:40 pm

As the U.S. federal, state, and local governments, as well as countries around the world, are implementing emergency measures to support their economies amid the coronavirus (COVID-19) threat, our experts are providing trusted analysis of the latest tax policy developments to better inform policymakers, journalists, and taxpayers.

Among our other resources, you can explore our state-by-state legislative tracker and our country-by-country fiscal measures tracker, where we will be tracking and and analyzing the latest coronavirus tax updates in the United States and around the world.

If you are new to the Tax Foundation’s work, you can learn more about who we are and what we do here. You can also support our work here.

April 2nd Evening State Tax Update

April 2, 2020

California extends tax filing and payment deadline to July 31 for a broad spectrum of business taxes as Virginia keeps May 1st tax filing deadline.

Understanding the Paycheck Protection Program in the CARES Act

April 2, 2020

Many small business owners are seeking guidance as they apply for loans backed by the Small Business Administration (SBA) to help maintain cash flow and retain workers even as more states announce new quarantine and shelter-in-place orders.

State Strategies for Closing FY 2020 with a Balanced Budget

April 2, 2020

State options for closing FY 2020 shortfalls are limited and may ultimately include drawing on reserve funds and even accounting tricks

Idaho, Mississippi, and Virginia are the Holdouts on July 15th Tax Deadlines

April 1, 2020

Every state with an individual income tax has made some adjustment to its filing or payment deadlines, but three—Idaho, Mississippi, and Virginia—have not followed the federal government’s date of July 15th or later.

How Healthy is Your State’s Rainy Day Fund?

April 1, 2020

Rainy day funds have increasingly emerged as a standard component of states’ budgeting toolkits. Economic cycles can have significant impacts on state revenue, but states can prepare for the inevitable downturns during good times by putting away money in a revenue stabilization fund.

State and Local Funding Totals Under the CARES Act

April 1, 2020

State and local governments across the country split $150 billion in federal aid under a provision of the Coronavirus Aid, Relief and Economic Security (CARES) Act, passed on March 30th.

FAQ on Federal Coronavirus Relief Bill (CARES Act)

April 2, 2020

Congress recently passed the largest economic relief bill in American history (CARES Act). We've created a FAQ portal to better inform policymakers, journalists, and taxpayers across the country on the new law.

Retroactive SALT Repeal Combines Weak Stimulus with Bad Tax Policy

March 31, 2020

House Speaker Nancy Pelosi (D-CA) has suggested that a retroactive repeal of the cap on State and Local Tax (SALT) deductions should be included in any future stimulus plans.

New Jersey Waives Telework Nexus During COVID-19 Crisis

March 31, 2020

New Jersey is temporarily waiving corporate nexus arising from employees teleworking due to the COVID-19 pandemic—a response to the crisis that other states should follow.

Gas Tax Revenue to Decline as Traffic Drops 38 Percent

March 31, 2020

Fewer people driving means fewer people buying gasoline, which may have positive effects on air pollution but could be detrimental to motor fuel excise tax revenue for federal and state governments.

A Visual Guide to Unemployment Benefit Claims

April 2, 2020

How quickly have unemployment claims risen in your state? How solvent is your state's unemployment insurance trust fund? See how your state compares with our new interactive tool.

March 27th Afternoon State Tax Update

March 27, 2020

Massachusetts, Ohio, and West Virginia have newly extended their income tax filing and payment deadlines to match the July 15 federal deadline.

Spain’s COVID-19 Economic Response

March 27, 2020

Spain's policy response needs to be broad and in keeping with long-term objectives. It is paramount that the short-term harm caused by this outbreak does not turn into a long-term economic downturn.

Evaluating the Trade-offs of Unemployment Compensation Changes in the CARES Act

March 27, 2020

Policymakers must weigh the trade-offs of subsidizing unemployment with mitigating community spread of coronavirus.

March 27th Morning State Tax Update

March 27, 2020

Arkansas, with a month-long 2020 fiscal session that is not set to begin until April 8, convened for a special session to create a new rainy day fund, with $173 million specifically dedicated to COVID-19 response efforts. Maine and Illinois extended their income tax filing deadlines.

India Pushes Digital Taxes in a Difficult Time

March 26, 2020

Even during the coronavirus outbreak, efforts to change the way digital business models are taxed continue. India announced this week that its tax aimed at foreign digital companies, the “equalization levy,” will be expanded.

Denmark Unplugs the Economy

March 26, 2020

Denmark, a high-tax country with 5.5 million citizens, has implemented policies designed to avoid layoffs and bankruptcies and basically unplug the economy during the pandemic.

March 26th Morning State Tax Update

March 26, 2020

Connecticut and Michigan have postponed their next legislative meeting day. California and Illinois weigh new budget priorities and forecasts in amid the economic fallout from COVID-19.

A German Export for Times of Crises: The Short-Time Work Scheme

March 25, 2020

One of the most talked about government economic responses to the COVID-19 crisis is Germany’s Kurzarbeit: the German short-work subsidy scheme.

Weighing the Value of Tax Credits During an Economic Crisis

March 25, 2020

One idea under consideration is adjusting existing tax credits, such as the Child Tax Credit (CTC) or Earned Income Tax Credit (EITC), to provide financial relief during the crisis.

State Aid Provisions of the Federal Coronavirus Response Bill

March 25, 2020

To be eligible for federal funding, state expenditures must meet certain conditions. We break down the state aid coronavirus provisions in the latest federal bill.

Working from Home Brings Greater Exposure to State Tax Codes

March 25, 2020

During the present crisis, remote work has become a necessity for many people. The tax implications, however, are very real and potentially quite complex.

VAT Exemption Thresholds in Europe

March 26, 2020

Due to certain VAT exemption thresholds, many small businesses will not be able to benefit from the VAT changes being introduced throughout Europe to provide relief during the COVID-19 crisis.

March 25th Morning State Tax Update

March 25, 2020

Several states have made progress on their budgets for FY 2021, which begins July 1 in most states. Numerous tax filing and payment deadlines have also been delayed.

What Happens with State Excise Tax Revenues During a Pandemic?

March 25, 2020

States will have to consider the effects of the COVID-19 pandemic on their excise tax revenues, including from gas taxes, tobacco taxes, and alcohol taxes.

Australia’s COVID-19 Support Focuses on Grants to Individuals and Small Businesses

March 24, 2020

In contrast to the sweeping economic relief plan being considered by the U.S. Congress, the approach taken by the Australian government is much more targeted to supporting individuals and small to medium-sized businesses.

Norway Opens the Fiscal Toolbox

March 24, 2020

Norway passed a large coronavirus tax relief package to address layoffs and bankruptcies, which includes a reduced VAT rate, the introduction of a loss carryback provision, and targeted postponements for wealth tax payments, among other provisions.

Tracking Economic Relief Plans Around the World during the Coronavirus Outbreak

March 25, 2020

Countries around the world are implementing emergency tax measures to support their economies under the coronavirus (COVID-19) threat.

Review and Analysis of House Democrats Coronavirus Response Bill

March 24, 2020

The proposed Take Responsibility for Workers and Families Act can be contrasted with the Senate Republican CARES Act, although they share some similarities by providing individual taxpayers with a rebate and modifying business tax provisions to provide liquidity for struggling firms.

What Should Coronavirus Response Legislation Look Like?

March 24, 2020

As lawmakers debate how to respond to the coronavirus crisis, they should focus the legislative response to the emergency at hand, using principled policy solutions to provide relief to those affected. Attempts to use the crisis to make other, unrelated policy changes should be avoided.

March 24th Morning State Tax Update

March 24, 2020

We are updating our state legislative tracker frequently to summarize new developments and provide analysis of relevant state tax trends as they emerge.

Tracking State Legislative Responses to COVID-19

April 2, 2020

Many states are racing to pass budgets, emergency COVID-19 supplemental appropriations, and other must-pass legislation as quickly as possible. We're tracking the latest state legislative responses to the coronavirus crisis.

Overview of Previous Tax Rebates During Economic Downturns

March 23, 2020

The timing from enactment to distribution has varied from about one and a half months to more than two months, indicating that it has historically taken a significant amount of time for individual taxpayers to receive their rebates after the policies have been put in place.

Are States Prepared for Skyrocketing Unemployment Insurance Claims?

March 20, 2020

Unemployment claims are going to tax state unemployment compensation trust funds beyond their limits. We need to start thinking about what to do about it.

Congress Approves Economic Relief Plan for Individuals and Businesses

March 30, 2020

The CARES Act, now signed into law, is intended to be a third round of federal government support in the wake of the coronavirus public health crisis and associated economic fallout, following the $8.3 billion in public health support passed two weeks ago and the Families First Coronavirus Response Act.

States Should Follow Federal Lead in Postponing Tax Day

March 20, 2020

The federal government moved tax day from April 15 to July 15 in response to the coronavirus pandemic, granting more time for both filing and payment. But for many taxpayers, it might not matter much if states don’t follow suit.

Lawmakers Concerned that Delay in Tax Filing Deadline Not Fully Understood

March 19, 2020

The U.S. Treasury Department has pushed the April 15 tax payment deadline to July 15. However, taxpayers still have to file their tax returns by the usual April 15 deadline.

For Italian Banks: Converting Future Deductions to Present Tax Credits

March 19, 2020

During the coronavirus outbreak, Italy has been hit especially hard. Policymakers have introduced numerous measures to stem the spread of the virus and provide relief to businesses that are facing a severe downturn.

Tax Policy to Bridge the Coronavirus-Induced Economic Slowdown

March 18, 2020

Tax policy can help by giving businesses current access to future tax “assets”—deductions and credits the businesses will be allowed or owed over time any way under current law—instead of making them wait.

Tax Policy and Economic Downturns

March 18, 2020

The Great Recession provides some insight into how tax revenues declined during a deep recession. Across OECD countries, revenues fell by 11 percent from 2008 to 2009 with corporate income taxes seeing the steepest decline at 28 percent. Revenues from individual income taxes fell by 16 percent.

How the Federal Government and the States Could Help Save Small Businesses Through Temporary UI Tax Adjustments

March 17, 2020

Governmental responses to the coronavirus outbreak will require creativity and flexibility—and one aspect of that may involve temporarily rethinking how we structure not only unemployment insurance (UI) benefits but also the taxes that pay for them.

Senate Receives Final Version of House Coronavirus Bill Offering Paid Leave

March 17, 2020

The House bill would provide two weeks of paid sick leave to workers who must quarantine, take care of a family member who is sick with coronavirus, or care for their children whose school or daycare has closed due to the public health emergency.

Tax Options for Economic Relief During the Coronavirus Crisis

March 17, 2020

Instead of simply reaching for fiscal stimulus with the goal of increasing economic activity, tax policy changes can give vulnerable individuals and businesses additional liquidity and space to survive the reduction in economic activity needed in light of the coronavirus outbreak.

Taxes and Liquidity During an Economic Crisis

March 17, 2020

Taxes present one policy tool available to ease the impending liquidity crunch brought on by the coronavirus crisis, which policymakers are already pursuing by postponing the tax payment deadline and waiving interest and penalties.

Income Taxes Are More Volatile Than Sales Taxes During an Economic Contraction

March 17, 2020

In the short term, states must anticipate reduced tax collections as the economy slows. And here, not all taxes are created equal. As a general rule, income taxes are more volatile than consumption taxes.

House of Representatives Bill Would Expand Paid Sick, Family, and Medical Leave to Address the Coronavirus Crisis

March 16, 2020

The bill, the Families First Coronavirus Response Act, would expand federal medical leave, create an emergency paid sick leave requirement, and provide tax credits against employer-side payroll taxes to help offset the cost of these two programs, among other provisions.

A History and Analysis of Payroll Tax Holidays

March 11, 2020

As Congress and the White House consider ways to shore up the economy in the face of a public health crisis, President Trump has suggested suspending the entire payroll tax for the duration of the year. That would cost about $950 billion, according to our analysis.

Understanding the Paycheck Protection Program in the CARES Act

April 2, 2020

Many small business owners are seeking guidance as they apply for loans backed by the Small Business Administration (SBA) to help maintain cash flow and retain workers even as more states announce new quarantine and shelter-in-place orders.

FAQ on Federal Coronavirus Relief Bill (CARES Act)

April 2, 2020

Congress recently passed the largest economic relief bill in American history (CARES Act). We've created a FAQ portal to better inform policymakers, journalists, and taxpayers across the country on the new law.

Retroactive SALT Repeal Combines Weak Stimulus with Bad Tax Policy

March 31, 2020

House Speaker Nancy Pelosi (D-CA) has suggested that a retroactive repeal of the cap on State and Local Tax (SALT) deductions should be included in any future stimulus plans.

Evaluating the Trade-offs of Unemployment Compensation Changes in the CARES Act

March 27, 2020

Policymakers must weigh the trade-offs of subsidizing unemployment with mitigating community spread of coronavirus.

Weighing the Value of Tax Credits During an Economic Crisis

March 25, 2020

One idea under consideration is adjusting existing tax credits, such as the Child Tax Credit (CTC) or Earned Income Tax Credit (EITC), to provide financial relief during the crisis.

Review and Analysis of House Democrats Coronavirus Response Bill

March 24, 2020

The proposed Take Responsibility for Workers and Families Act can be contrasted with the Senate Republican CARES Act, although they share some similarities by providing individual taxpayers with a rebate and modifying business tax provisions to provide liquidity for struggling firms.

What Should Coronavirus Response Legislation Look Like?

March 24, 2020

As lawmakers debate how to respond to the coronavirus crisis, they should focus the legislative response to the emergency at hand, using principled policy solutions to provide relief to those affected. Attempts to use the crisis to make other, unrelated policy changes should be avoided.

Overview of Previous Tax Rebates During Economic Downturns

March 23, 2020

The timing from enactment to distribution has varied from about one and a half months to more than two months, indicating that it has historically taken a significant amount of time for individual taxpayers to receive their rebates after the policies have been put in place.

Congress Approves Economic Relief Plan for Individuals and Businesses

March 30, 2020

The CARES Act, now signed into law, is intended to be a third round of federal government support in the wake of the coronavirus public health crisis and associated economic fallout, following the $8.3 billion in public health support passed two weeks ago and the Families First Coronavirus Response Act.

Lawmakers Concerned that Delay in Tax Filing Deadline Not Fully Understood

March 19, 2020

The U.S. Treasury Department has pushed the April 15 tax payment deadline to July 15. However, taxpayers still have to file their tax returns by the usual April 15 deadline.

Tax Policy to Bridge the Coronavirus-Induced Economic Slowdown

March 18, 2020

Tax policy can help by giving businesses current access to future tax “assets”—deductions and credits the businesses will be allowed or owed over time any way under current law—instead of making them wait.

How the Federal Government and the States Could Help Save Small Businesses Through Temporary UI Tax Adjustments

March 17, 2020

Governmental responses to the coronavirus outbreak will require creativity and flexibility—and one aspect of that may involve temporarily rethinking how we structure not only unemployment insurance (UI) benefits but also the taxes that pay for them.

Senate Receives Final Version of House Coronavirus Bill Offering Paid Leave

March 17, 2020

The House bill would provide two weeks of paid sick leave to workers who must quarantine, take care of a family member who is sick with coronavirus, or care for their children whose school or daycare has closed due to the public health emergency.

Tax Options for Economic Relief During the Coronavirus Crisis

March 17, 2020

Instead of simply reaching for fiscal stimulus with the goal of increasing economic activity, tax policy changes can give vulnerable individuals and businesses additional liquidity and space to survive the reduction in economic activity needed in light of the coronavirus outbreak.

Taxes and Liquidity During an Economic Crisis

March 17, 2020

Taxes present one policy tool available to ease the impending liquidity crunch brought on by the coronavirus crisis, which policymakers are already pursuing by postponing the tax payment deadline and waiving interest and penalties.

House of Representatives Bill Would Expand Paid Sick, Family, and Medical Leave to Address the Coronavirus Crisis

March 16, 2020

The bill, the Families First Coronavirus Response Act, would expand federal medical leave, create an emergency paid sick leave requirement, and provide tax credits against employer-side payroll taxes to help offset the cost of these two programs, among other provisions.

A History and Analysis of Payroll Tax Holidays

March 11, 2020

As Congress and the White House consider ways to shore up the economy in the face of a public health crisis, President Trump has suggested suspending the entire payroll tax for the duration of the year. That would cost about $950 billion, according to our analysis.

April 2nd Evening State Tax Update

April 2, 2020

California extends tax filing and payment deadline to July 31 for a broad spectrum of business taxes as Virginia keeps May 1st tax filing deadline.

State Strategies for Closing FY 2020 with a Balanced Budget

April 2, 2020

State options for closing FY 2020 shortfalls are limited and may ultimately include drawing on reserve funds and even accounting tricks

Idaho, Mississippi, and Virginia are the Holdouts on July 15th Tax Deadlines

April 1, 2020

Every state with an individual income tax has made some adjustment to its filing or payment deadlines, but three—Idaho, Mississippi, and Virginia—have not followed the federal government’s date of July 15th or later.

How Healthy is Your State’s Rainy Day Fund?

April 1, 2020

Rainy day funds have increasingly emerged as a standard component of states’ budgeting toolkits. Economic cycles can have significant impacts on state revenue, but states can prepare for the inevitable downturns during good times by putting away money in a revenue stabilization fund.

State and Local Funding Totals Under the CARES Act

April 1, 2020

State and local governments across the country split $150 billion in federal aid under a provision of the Coronavirus Aid, Relief and Economic Security (CARES) Act, passed on March 30th.

New Jersey Waives Telework Nexus During COVID-19 Crisis

March 31, 2020

New Jersey is temporarily waiving corporate nexus arising from employees teleworking due to the COVID-19 pandemic—a response to the crisis that other states should follow.

Gas Tax Revenue to Decline as Traffic Drops 38 Percent

March 31, 2020

Fewer people driving means fewer people buying gasoline, which may have positive effects on air pollution but could be detrimental to motor fuel excise tax revenue for federal and state governments.

A Visual Guide to Unemployment Benefit Claims

April 2, 2020

How quickly have unemployment claims risen in your state? How solvent is your state's unemployment insurance trust fund? See how your state compares with our new interactive tool.

March 27th Afternoon State Tax Update

March 27, 2020

Massachusetts, Ohio, and West Virginia have newly extended their income tax filing and payment deadlines to match the July 15 federal deadline.

March 27th Morning State Tax Update

March 27, 2020

Arkansas, with a month-long 2020 fiscal session that is not set to begin until April 8, convened for a special session to create a new rainy day fund, with $173 million specifically dedicated to COVID-19 response efforts. Maine and Illinois extended their income tax filing deadlines.

March 26th Morning State Tax Update

March 26, 2020

Connecticut and Michigan have postponed their next legislative meeting day. California and Illinois weigh new budget priorities and forecasts in amid the economic fallout from COVID-19.

State Aid Provisions of the Federal Coronavirus Response Bill

March 25, 2020

To be eligible for federal funding, state expenditures must meet certain conditions. We break down the state aid coronavirus provisions in the latest federal bill.

Working from Home Brings Greater Exposure to State Tax Codes

March 25, 2020

During the present crisis, remote work has become a necessity for many people. The tax implications, however, are very real and potentially quite complex.

March 25th Morning State Tax Update

March 25, 2020

Several states have made progress on their budgets for FY 2021, which begins July 1 in most states. Numerous tax filing and payment deadlines have also been delayed.

What Happens with State Excise Tax Revenues During a Pandemic?

March 25, 2020

States will have to consider the effects of the COVID-19 pandemic on their excise tax revenues, including from gas taxes, tobacco taxes, and alcohol taxes.

March 24th Morning State Tax Update

March 24, 2020

We are updating our state legislative tracker frequently to summarize new developments and provide analysis of relevant state tax trends as they emerge.

Tracking State Legislative Responses to COVID-19

April 2, 2020

Many states are racing to pass budgets, emergency COVID-19 supplemental appropriations, and other must-pass legislation as quickly as possible. We're tracking the latest state legislative responses to the coronavirus crisis.

Are States Prepared for Skyrocketing Unemployment Insurance Claims?

March 20, 2020

Unemployment claims are going to tax state unemployment compensation trust funds beyond their limits. We need to start thinking about what to do about it.

States Should Follow Federal Lead in Postponing Tax Day

March 20, 2020

The federal government moved tax day from April 15 to July 15 in response to the coronavirus pandemic, granting more time for both filing and payment. But for many taxpayers, it might not matter much if states don’t follow suit.

How the Federal Government and the States Could Help Save Small Businesses Through Temporary UI Tax Adjustments

March 17, 2020

Governmental responses to the coronavirus outbreak will require creativity and flexibility—and one aspect of that may involve temporarily rethinking how we structure not only unemployment insurance (UI) benefits but also the taxes that pay for them.

Income Taxes Are More Volatile Than Sales Taxes During an Economic Contraction

March 17, 2020

In the short term, states must anticipate reduced tax collections as the economy slows. And here, not all taxes are created equal. As a general rule, income taxes are more volatile than consumption taxes.

Spain’s COVID-19 Economic Response

March 27, 2020

Spain's policy response needs to be broad and in keeping with long-term objectives. It is paramount that the short-term harm caused by this outbreak does not turn into a long-term economic downturn.

India Pushes Digital Taxes in a Difficult Time

March 26, 2020

Even during the coronavirus outbreak, efforts to change the way digital business models are taxed continue. India announced this week that its tax aimed at foreign digital companies, the “equalization levy,” will be expanded.

Denmark Unplugs the Economy

March 26, 2020

Denmark, a high-tax country with 5.5 million citizens, has implemented policies designed to avoid layoffs and bankruptcies and basically unplug the economy during the pandemic.

A German Export for Times of Crises: The Short-Time Work Scheme

March 25, 2020

One of the most talked about government economic responses to the COVID-19 crisis is Germany’s Kurzarbeit: the German short-work subsidy scheme.

VAT Exemption Thresholds in Europe

March 26, 2020

Due to certain VAT exemption thresholds, many small businesses will not be able to benefit from the VAT changes being introduced throughout Europe to provide relief during the COVID-19 crisis.

Australia’s COVID-19 Support Focuses on Grants to Individuals and Small Businesses

March 24, 2020

In contrast to the sweeping economic relief plan being considered by the U.S. Congress, the approach taken by the Australian government is much more targeted to supporting individuals and small to medium-sized businesses.

Norway Opens the Fiscal Toolbox

March 24, 2020

Norway passed a large coronavirus tax relief package to address layoffs and bankruptcies, which includes a reduced VAT rate, the introduction of a loss carryback provision, and targeted postponements for wealth tax payments, among other provisions.

Tracking Economic Relief Plans Around the World during the Coronavirus Outbreak

March 25, 2020

Countries around the world are implementing emergency tax measures to support their economies under the coronavirus (COVID-19) threat.

For Italian Banks: Converting Future Deductions to Present Tax Credits

March 19, 2020

During the coronavirus outbreak, Italy has been hit especially hard. Policymakers have introduced numerous measures to stem the spread of the virus and provide relief to businesses that are facing a severe downturn.

Tax Policy and Economic Downturns

March 18, 2020

The Great Recession provides some insight into how tax revenues declined during a deep recession. Across OECD countries, revenues fell by 11 percent from 2008 to 2009 with corporate income taxes seeing the steepest decline at 28 percent. Revenues from individual income taxes fell by 16 percent.