At a time when many people fear higher future federal taxes are inevitable, nearly a dozen states are considering legislation that would slash state income tax rates beginning this year.
The Tax Foundation notes that even though 2022 has just gotten underway, already there is “a flurry of activity on taxes, with arrows almost invariably pointing toward tax reform and tax relief.”
The foundation acknowledges that all of these proposals are in the very early stages and could easily end up going nowhere. But at least for now, cuts to individual income tax rates are the most common type of tax proposal in legislatures across the U.S.
The 11 states that are considering cutting individual income tax rates are:
- New York
- South Carolina
Eight more states are considering cutting corporate income taxes: Arizona, Colorado, Idaho, Indiana, Iowa, Michigan, Missouri and Utah.
If your state isn’t on either list, don’t give up hope. The Tax Foundation notes that both lists are likely to grow as state legislative sessions continue.
What is behind these states’ sudden tax largesse? According to the foundation:
“Given robust revenue growth (state tax collections rose 21 percent last year) and projections of significantly higher revenue for the foreseeable future, most states are exploring ways to return some of their increased revenue to the taxpayers.”
Not every state is in the mood to be so generous, however. The foundation says two states — Hawaii and Massachusetts — are proposing income tax increases in 2022.
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