Taxes are often a major issue during elections, and 2020 is no exception.
While millions of Americans focus on who will win the presidency — and what it means for their wallets — many states quietly are moving ahead with their own plans to hike taxes on the wealthy.
Nine states are likely to soon raise taxes on workers who earn high salaries, according to the National Conference of State Legislatures. Those states are:
- California
- Hawaii
- Illinois
- Maryland
- Massachusetts
- New York
- Oklahoma
- Vermont
- Wisconsin
CNBC notes that if each of the nine states follows through with plans to hike taxes, a large portion of the nation’s wealthy residents will feel the impact:
“Those states account for more than a third of the U.S. population, and nearly half of the nation’s millionaires, according to population data and wealth surveys.”
The nine states considering tax hikes are following in the footsteps of New Jersey, which recently raised its income tax rate to 10.75% for those earning more than $1 million annually. The previous rate for Garden State residents who earned that much was 8.97%.
Jackson Brainerd, senior policy specialist with the National Conference of State Legislatures, tells CNBC that the hikes are a result of state budget shortfalls. The coronavirus pandemic has made it especially difficult for states to meet their obligations.
In fact, Brainerd expects other states to follow suit during 2021 and raise taxes unless those states receive federal aid that will help them climb out of their fiscal holes.
Cutting your taxes today
If you are worried that your tax rate might soon rise — whether you earn $1 million or a figure considerably south of that number — know that you can take steps to trim your tax bill.
In fact, being proactive is the best way to keep money in your pocket and out of the government’s hands. So, are you worried that changes related to the coronavirus pandemic might impact your return? If not, you should be. Find out more in “5 Ways the Coronavirus Will Change Your Next Tax Return.”
Yes, it’s smart to direct most of your tax-planning energies toward the return you will file in the spring. But a big part of smart tax planning is thinking ahead by years — or even decades. So, if you are looking to minimize taxes in retirement — or even beyond — you can profit by reading:
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