Reviewing reported income helps to understand the composition of the federal government’s revenue base and how Americans earn their taxable income. The individual income tax, the federal government’s largest source of revenue, is largely a tax on labor.
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Summer has arrived and states are beginning to implement policy changes that were enacted during the legislative session (or are being phased in over time).
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President Biden is proposing extraordinarily large tax hikes on businesses and the top 1 percent of earners that would put the US in a distinctly uncompetitive international position and threaten the health of the US economy.
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Neutral tax codes don’t play favorites or try to influence personal or business decisions but stick to what they’re best at – raising sufficient revenue through low rates and a broad base.
Lawmakers should see 2025 as an opportunity to consider more fundamental tax reforms. While the TCJA addressed some of the deficiencies of the tax code, it by no means addressed them all.
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To make sound financial decisions and support better tax policy, taxpayers should understand the taxes they face. Unfortunately, most U.S. taxpayers do not know or are unsure of basic tax concepts.
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Policymakers should have two priorities in the upcoming economic policy debates: a larger economy and fiscal responsibility. Principled, pro-growth tax policy can help accomplish both.
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At the end of 2025, the individual tax provisions in the Tax Cuts and Jobs Act (TCJA) expire all at once. Without congressional action, most taxpayers will see a notable tax increase relative to current policy in 2026.
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The TCJA improved the U.S. tax code, but the meandering voyage of its passing and the compromises made to get it into law show the challenges of the legislative process.
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As tempting as inheritance, estate, and gift taxes might look—especially when the OECD notes them as a way to reduce wealth inequality—their limited capacity to collect revenue and their negative impact on entrepreneurial activity, saving, and work should make policymakers consider their repeal instead of boosting them.
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One relatively easy but meaningful step policymakers can take to make future tax seasons less burdensome is to modernize their state’s nonresident income tax filing, withholding, and reciprocity laws.
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Despite taxes playing a significant role in personal finances and being levied on a sizable portion of the U.S. population, most Americans are not just unhappy with the current tax code but also do not understand it.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
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Short FormThe federal income tax drives the tax code’s progressivity. In 2021, taxpayers with higher incomes paid much higher average income tax rates than taxpayers with lower incomes.
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Given that U.S. debt is roughly the size of our annual economic output, policymakers will face many tough fiscal choices in the coming years. The good news is there are policies that both support a larger economy and avoid adding to the debt.
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Designing tax policy in a way that sustainably finances government activities while minimizing distortions is important for supporting a productive economy.
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The 2021 tax year was the fourth since the Tax Cuts and Jobs Act (TCJA) made many significant, but temporary, changes to the individual income tax code to lower tax rates, widen brackets, increase the standard deduction and child tax credit, and more.
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Unless Congress acts, Americans are in for a tax hike in 2026.
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Does your state have a small business exemption for machinery and equipment?
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