Thirty-four states are implementing major changes to their tax code next year. Is your state one of them? The Tax Foundation’s Manish Bhatt and Benjamin Jaros explain:
Thirty-four states will ring in the new year with notable tax changes, including 15 states cutting individual or corporate income taxes (and some cutting both). Generally, state tax changes take effect either at the start of the calendar year (January 1) or the fiscal year (July 1 for most states), with rate changes for major taxes typically implemented effective January 1—either prospectively, as in these cases, or retroactively, as may happen under legislation enacted in the new year.
The past several years have seen a wave of significant tax reforms, including rate reductions and tax cuts, as states emerged from the pandemic with revenue surpluses and stared down inflation. Whether and how this trend continues is yet to be seen, but evidence from the past three years indicates that many states understand and value the importance of creating and maintaining a stable, pro-growth, and competitive tax code.
Bhatt and Jaros summarized the major income tax changes, writing:
Twelve states have individual income tax rate reductions taking effect in 2024: Arkansas, Connecticut, Georgia, Indiana, Iowa, Mississippi, Montana, Nebraska, New Hampshire (interest and dividends income only), North Carolina, Ohio, and South Carolina. Two states—Ohio and Montana—will consolidate some tax brackets, and one state, Georgia, will move to a flat tax.
Michigan taxpayers will be subject to a higher individual income tax in 2024 than they saw in 2023. Two states, Montana and Massachusetts, have codified filing status requirements. And Missouri has effectively exempted social security payments from taxation.
Action Line: Is your state raising your taxes while inflation eats more of your disposable income? Politicians should be looking for ways to ease the burdens faced by their constituents, not increasing them. If you’re looking for a better America, begin your search with Your Survival Guy’s 2023 Super States. And click here to subscribe to my free monthly Survive & Thrive letter and be among the first to receive my list of 2024 Super States.
