March 27th Afternoon State Tax Update

Income TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Filing and Payment Deadline Changes

Three states (Massachusetts, Ohio, and West Virginia) have newly extended their income tax filing and payment deadlines to match the July 15 federal deadline. As of this writing, Michigan and New Jersey are the only states that levy a tax on individual wage income that have not yet extended their deadlines, but the governors of both states have announced they are actively considering extending theirs as well.

In New Jersey, the legislature passed a bill (A.B. 3841/ S.B. 2300) that would extend the state’s income tax deadline to no later than June 30, which is the last day of fiscal year (FY) 2020. In extending their tax deadlines into the new fiscal year, many states will, by law, need to make certain budget transfers to avoid ending FY 2020 with a budget shortfall. In Rhode Island, at the request of Gov. Gina Raimondo (D), the Emergency Funding Board approved borrowing up to $300 million to shore up the general fund until the state receives tax revenue in July. Utah’s 2020 legislative session adjourned March 12 as scheduled, but lawmakers plan to convene a special session to approve revenue transfers to avoid ending the year with a deficit.

State Revenue and Spending Developments

Many states are beginning to consider how the COVID-19 pandemic will affect both their revenue collections and their spending needs. On March 25, Kansas Governor Laura Kelly (D) signed into law a basic budget for FY 2021 that includes $65 million in coronavirus response funding. The state expects a new revenue forecast will be available April 20. Arkansas’s revised revenue forecast anticipates $353.1 million less in revenue for the current fiscal year than was projected last May. In Louisiana, revenue forecasters anticipate having $500 million less than was expected going into FY 2021. Minnesota budget writers anticipate the state’s budget surplus and rainy day fund will be depleted over the next two years due to COVID-19. In New Jersey, over $900 million in planned appropriations have been frozen for COVID-19 response purposes, including spending normally used to offer a Homestead Benefit tax creditA tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly. against property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. liability for qualifying seniors, individuals with disabilities, and lower-income residents. New York Gov. Andrew Cuomo (D) has predicted the state will have $15 billion less to spend in FY 2021 due to COVID-19.

State Legislative Session Changes

New Hampshire, after initially suspending its legislative session through April 10, has further suspended its session through May 4.

Other Tax Filing and Payment Deadline Changes

Florida, a state with no individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. , has extended its March 31 property tax payment due date to April 15.

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