With a divided Congress and looming changes coming via potential expiration of the Tax Cuts and Jobs Act of 2017 (TCJA), it’s crucial to consider the implications for state taxes. Federal changes can have a cascading effect on states, with more than 50% of states already reducing their income or corporate tax rates due to surplus pandemic funds.
As these funds diminish and the economy remains unpredictable, it’s likely that states will seek additional revenue streams. The resolution of new tax issues could take time, as seen with the TCJA, which is just now being addressed by certain states.
When analyzing state elections, only 20% of states have governorships and legislatures split by party. With certain states vulnerable to political shifts, electoral outcomes are poised to influence taxation policies. Ballot measures, such as Oregon’s proposal for an increase in minimum tax coupled with redistribution, suggest a trend toward new and novel tax structures in certain states.
In a climate of general uncertainty, these state tax developments underscore the need for a proactive approach and specialized guidance. As we continue to monitor the evolving landscape of state taxes, understanding the potential impacts and staying informed on ballot initiatives will be crucial for adapting to potential changes ahead in your tax environment.
Watch this video, featuring Robert Johnson, Crowe state and local tax partner, for a deeper look into election-related tax trends at the state level.
