Income Tax Cuts In 27 U.S. States— See Which States Will Benefit

Due to the COVID-19 financial assistance and increase in revenues, several state governments are still flush with funds. Fortunately, some of these states consider using those budget surplus for the residents’ personal income tax cuts. The Institute on Taxation and Economic Policy (ITEP) says that at least 27 U.S. states consider providing personal income tax cuts for their residents.

According to Adamczyk, the state of Georgia is considering personal income tax cuts that is intended to be effective in 2024. However, the U.S. states like Wisconsin, Vermont, Minnesota, Michigan, and Kansas are still in discussion whether some retirement income must be exempted from being taxed. In the states of Ohio and North Dakota, they are discussing the shifting to flat rates from graduated income taxes to flat rates. These income tax cuts are an extension of the tax credits and tax rebates that several states established since 2021.

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According to Picchi, U.S. states like West Virginia, Mississippi, Louisiana, Indiana, and Arkansas are even considering eliminating their state income taxes. To date, there are 9 U.S. states that have no personal income taxes at all. These states include Wyoming, Washington, Texas, Tennessee, South Dakota, New Hampshire, Nevada, Florida, and Alaska.

However, although the personal income tax cuts have been supported by the Tax Foundation, the ITEP finds the income tax cuts impractical. This is because the ITEP believes that the states with low income taxes compensate for the money elsewhere. The compensations often come from an increase in excise and sales taxes which affect residents with low income more than than the rich taxpayers.

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