Patrick Ziegler, Adobe Stock

Trend: States Reform Income Taxes to Provide Relief and Remain Competitive

As states emerge from the COVID-19 pandemic, many have significantly more revenue on hand than most ever thought possible in the early days of the pandemic. Taxable income grew over the past year, partly due to time-limited federal infusions, but largely because longer-term economic trends continued almost unabated.

States are emerging from the public health crisis not only with adequate revenue, but in many cases robust growth, and so far, many have responded by returning extra revenue to taxpayers in a manner that also improves the structure of their tax code.

Many policymakers, moreover, have seen tax reform and relief not just as an opportunity but as a necessity, a way of demonstrating their state’s commitment to tax and overall economic competitiveness in an increasingly mobile world.

This resource center highlights Tax Foundation’s analysis of many of the significant state tax reform measures that have been enacted during the COVID-19 recovery.

States Respond to Strong Fiscal Health with Income Tax Reforms

July 15, 2021

As states close their books for fiscal year 2021, many have much more revenue on hand than they anticipated last year. Eleven states have responded by reducing income tax rates and making related structural reforms as they strive to solidify a competitive advantage in an increasingly competitive national landscape.

What’s in Arizona’s Tax Reform Package?

July 1, 2021

After weeks of deliberations, Arizona Gov. Doug Ducey signed into law a budget for fiscal year (FY) 2022 that reduces the state’s individual income tax rates and consolidates brackets, a plan that will help restore Arizona’s reputation as a low-tax alternative to California.

Wisconsin Legislature Considering Several Pro-Growth Tax Reforms

June 29, 2021

Reducing the second-highest individual income tax rate, repealing the TPP tax, and freezing UI tax rates are three valuable reforms that would help promote a smooth economic recovery in Wisconsin while setting the state up for robust economic growth for years to come.

New Hampshire Closes in on Tax Cuts to Enhance State’s Competitive Advantage

June 23, 2021

New Hampshire lawmakers are scheduled to take up a budget conference report which contains several tax reforms negotiated by both chambers that would ultimately make New Hampshire the ninth state to impose no tax on individual income. These reforms floated at the beginning of the 2021 session found their way into HB 2, including rate reductions in the Business Profits Tax (BPT) and Business Enterprise Tax (BET) and a phaseout of the interest and dividends tax.

Louisiana Fiscal Session Finishes Strong with Tax Reform

June 11, 2021

It took until the last day of the session, but Louisiana lawmakers succeeded in passing a tax reform package Thursday that would simplify a complicated tax code and make the state more economically competitive.

Ohio Lawmakers Ponder Tax Relief after Rosy Revenue Outlook

June 3, 2021

Ohio is one of a growing number of states which experienced revenue increases despite the economic slowdown from the coronavirus pandemic and is now looking to return some of that through tax relief.

Montana Adopts Individual and Corporate Income Tax Reform

June 1, 2021

Montana adopted structural reforms to both individual and corporate income taxes during the recently adjourned legislative session, enacting three bills reducing individual tax rates, simplifying the state’s individual tax system, repealing 16 tax credits, and changing the apportionment factor for corporate income tax.

Oklahoma Passes Corporate and Individual Income Tax Reductions

May 25, 2021

Last Friday, Oklahoma Governor Kevin Stitt (R) signed House Bills 2960, 2962, and 2963 into law as part of a budget agreement, bringing the legislature’s tax plans across the finish line. These bills will reduce the state’s corporate and individual income tax rates beginning in tax year 2022.

States Respond to Strong Fiscal Health with Income Tax Reforms

July 15, 2021

As states close their books for fiscal year 2021, many have much more revenue on hand than they anticipated last year. Eleven states have responded by reducing income tax rates and making related structural reforms as they strive to solidify a competitive advantage in an increasingly competitive national landscape.

What’s in Arizona’s Tax Reform Package?

July 1, 2021

After weeks of deliberations, Arizona Gov. Doug Ducey signed into law a budget for fiscal year (FY) 2022 that reduces the state’s individual income tax rates and consolidates brackets, a plan that will help restore Arizona’s reputation as a low-tax alternative to California.

Wisconsin Legislature Considering Several Pro-Growth Tax Reforms

June 29, 2021

Reducing the second-highest individual income tax rate, repealing the TPP tax, and freezing UI tax rates are three valuable reforms that would help promote a smooth economic recovery in Wisconsin while setting the state up for robust economic growth for years to come.

New Hampshire Closes in on Tax Cuts to Enhance State’s Competitive Advantage

June 23, 2021

New Hampshire lawmakers are scheduled to take up a budget conference report which contains several tax reforms negotiated by both chambers that would ultimately make New Hampshire the ninth state to impose no tax on individual income. These reforms floated at the beginning of the 2021 session found their way into HB 2, including rate reductions in the Business Profits Tax (BPT) and Business Enterprise Tax (BET) and a phaseout of the interest and dividends tax.

Louisiana Fiscal Session Finishes Strong with Tax Reform

June 11, 2021

It took until the last day of the session, but Louisiana lawmakers succeeded in passing a tax reform package Thursday that would simplify a complicated tax code and make the state more economically competitive.

Ohio Lawmakers Ponder Tax Relief after Rosy Revenue Outlook

June 3, 2021

Ohio is one of a growing number of states which experienced revenue increases despite the economic slowdown from the coronavirus pandemic and is now looking to return some of that through tax relief.

Montana Adopts Individual and Corporate Income Tax Reform

June 1, 2021

Montana adopted structural reforms to both individual and corporate income taxes during the recently adjourned legislative session, enacting three bills reducing individual tax rates, simplifying the state’s individual tax system, repealing 16 tax credits, and changing the apportionment factor for corporate income tax.

Oklahoma Passes Corporate and Individual Income Tax Reductions

May 25, 2021

Last Friday, Oklahoma Governor Kevin Stitt (R) signed House Bills 2960, 2962, and 2963 into law as part of a budget agreement, bringing the legislature’s tax plans across the finish line. These bills will reduce the state’s corporate and individual income tax rates beginning in tax year 2022.

States Respond to Strong Fiscal Health with Income Tax Reforms

July 15, 2021

As states close their books for fiscal year 2021, many have much more revenue on hand than they anticipated last year. Eleven states have responded by reducing income tax rates and making related structural reforms as they strive to solidify a competitive advantage in an increasingly competitive national landscape.

New Hampshire Closes in on Tax Cuts to Enhance State’s Competitive Advantage

June 23, 2021

New Hampshire lawmakers are scheduled to take up a budget conference report which contains several tax reforms negotiated by both chambers that would ultimately make New Hampshire the ninth state to impose no tax on individual income. These reforms floated at the beginning of the 2021 session found their way into HB 2, including rate reductions in the Business Profits Tax (BPT) and Business Enterprise Tax (BET) and a phaseout of the interest and dividends tax.

Louisiana Fiscal Session Finishes Strong with Tax Reform

June 11, 2021

It took until the last day of the session, but Louisiana lawmakers succeeded in passing a tax reform package Thursday that would simplify a complicated tax code and make the state more economically competitive.

Montana Adopts Individual and Corporate Income Tax Reform

June 1, 2021

Montana adopted structural reforms to both individual and corporate income taxes during the recently adjourned legislative session, enacting three bills reducing individual tax rates, simplifying the state’s individual tax system, repealing 16 tax credits, and changing the apportionment factor for corporate income tax.

Oklahoma Passes Corporate and Individual Income Tax Reductions

May 25, 2021

Last Friday, Oklahoma Governor Kevin Stitt (R) signed House Bills 2960, 2962, and 2963 into law as part of a budget agreement, bringing the legislature’s tax plans across the finish line. These bills will reduce the state’s corporate and individual income tax rates beginning in tax year 2022.