State Tax Trends to Watch in 2026
State lawmakers around the country have begun their legislative sessions, and many are considering tax reform. This piece highlights some of the areas on which they are likely to focus.
4 min read
State lawmakers around the country have begun their legislative sessions, and many are considering tax reform. This piece highlights some of the areas on which they are likely to focus.
4 min read
The tariffs now in effect threaten to offset much of the GDP growth from the tax cuts, while falling short of paying for them.
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Our analysis of the major tax provisions included in the OBBBA finds it will increase long-run GDP by 0.7 percent. The major tax provisions will reduce federal tax revenue by nearly $5.2 trillion between 2025 and 2034, on a conventional basis.
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Denmark (55.9 percent), France (55.4 percent), and Austria (55 percent) levy the highest top personal income tax rates in Europe.
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Although New York’s 2027 budget proposal avoids tax increases on income, sales, and property taxes, it is full of policy proposals that threaten the long-run integrity of the state’s finances and harm New York taxpayers.
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Washington lawmakers are holding their first hearing on long-anticipated legislation that would create a new 9.9 percent tax on income over $1 million.
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Lawmakers in many states continue to pursue additional income tax relief, while their counterparts elsewhere pursue the opposite goal.
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With changes to payroll taxes likely to be part of a toolkit for reform, both policymakers and the public would benefit from understanding how the payroll tax works, who pays it, and its impact on the economy.
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Should both HB 979 and HB 378 pass, Virginia would have the nation’s highest top marginal rate on investment income.
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One area of the tax code in which extreme complexity and low compliance go hand-in-hand—and where reform is desperately needed—is in states’ nonresident individual income tax filing and withholding laws.
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The tax code is ripe for simplification, especially as complicated and targeted provisions expire in 2028.
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While the CEA’s analysis of the benefits of reduced reliance on income taxes is sound, its revenue replacement estimates are not. The actual revenue replacement rate could be as high as 17.51 percent.
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Economic policy in 2025 came with historic highs but also disappointing lows.
Michigan’s proposed 5 percent income surtax on high earners, yielding a top marginal rate of 9.25 percent, is also a tax on the small businesses that employ nearly 2 million Michiganders.
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Though politically popular, “no tax on tips and overtime” is a short-sighted gimmick that risks derailing West Virginia’s path to prosperity.
When taxpayers file their 2025 tax returns in 2026, many will see larger refunds than in recent years. That’s due to the One Big Beautiful Bill Act (OBBBA), which reduced individual income taxes for 2025 by an estimated $129 billion.
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The 2026 Billionaire Tax Act, a California ballot initiative, would ostensibly impose a one-time tax of 5 percent on the net worth of the state’s billionaires. Due, however, to aggressive design choices and possible drafting errors, the actual rate on taxpayers’ net worth could be dramatically higher.
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A proposed “millionaire’s tax” in Washington State would yield the highest combined state and local top rate in the country.
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As policymakers consider reforms to the individual income tax, understanding the types of income that make up the individual income tax base can help them understand the trade-offs of different changes to the tax system.
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Scandinavian countries are well known for their broad social safety nets and their public funding of services such as universal health care, higher education, parental leave, and child and elderly care. High levels of government spending naturally require high levels of taxation. So, how do these countries raise their tax revenues?
7 min read