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1 Katherine Loughead, State Tax Changes Effective January 1, 2021 1 (2021)

handle is hein.taxfoundation/sttxch0001 and id is 1 raw text is: State Tax Changes Effective January 1, 2021 FISCAL FACT No. 736 Jan. 2021 The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and global levels. We are a 501(c)(3) nonprofit organization. ©2021 Tax Foundation Distributed under Creative Commons CC-BY-NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org Katherine Loughead Senior PolicyAnalyst Key Findings Twenty-six states and the District of Columbia had notable tax changes take effect. Arkansas and Iowa reduced their corporate income tax rates and made other substantive changes to their corporate income tax base. Arizona and New Mexico increased their top marginal individual income tax rates by adding another bracket. Arkansas reduced its top marginal individual income tax rate by eliminating the top income tax bracket. Tennessee joins seven other states that do not levy any individual income tax. The Hall Tax, which previously taxed interest and dividend income but not wage income, has been completely phased out. Arizona and Illinois made changes to their economic nexus laws governing sales and use tax collection requirements for remote sellers. Connecticut, Vermont, and the District of Columbia will see adjustments to their estate tax exemptions and/or rates this year. Connecticut began the phaseout of its capital stock tax; Illinois and Mississippi are continuing their phaseout processes; and New York's capital stock tax has been completely repealed. * Colorado and Oregon increased their cigarette taxes; Colorado, Georgia, and Oregon created new taxes on vapor products. Arizona, Montana, and New Jersey recently legalized recreational marijuana and set up a preliminary tax structure for when legal in-state sales begin. North Carolina took legislative action to prevent an automatic rate reduction to its motor fuel tax at the beginning of the year. California, Colorado, and New Jersey had significant retroactive tax changes take effect in 2020 that are worth being aware of as the new year begins.

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