About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

1 Katherine Loughead & Jared Walczak, States Respond to Strong Fiscal Health with Income Tax Reforms 1 (2021)

handle is hein.taxfoundation/serdtsg0001 and id is 1 raw text is: States Respond to Strong Fiscal
Health with Income Tax Reforms

No. 774
July 2021

Katherine Loughead Senior Policy Analyst
Jared Walczak      Vice President of State Projects

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) nonproht
©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

Key Findings
 As states close their books for fiscal year 2021, many have much more
revenue on hand than they anticipated last year.
 In 2021, 11 states have enacted laws to reduce their income tax rates, with 10
reducing individual income tax rates and five reducing corporate income tax
 In many states, these rate reductions are paired with other pro-growth
 These income tax reforms have various effective dates. Some are retroactive
to the beginning of 2021; some take effect in January 2022; and others take
effect in 2023 or beyond or phase in over time.
 Five states-Arizona, Idaho, Iowa, Montana, and Ohio-enacted laws to
reduce the number of brackets in their individual income tax, creating a more
neutral structure.
 Five states-Arizona, Idaho, Louisiana, Ohio, and Oklahoma-enacted laws to
reduce each of their marginal individual income tax rates.
 Of the 10 states that reduced their individual income tax rates, all but
Wisconsin included reductions to the top marginal rate.
 Montana consolidated seven brackets into two, reducing the top rate and
adopting a significantly higher standard deduction to provide targeted relief
to those at the lower end of the income spectrum.

1   The authors would like to thank Jeremiah Nguyen for his valuable research contributions.


What Is HeinOnline?

HeinOnline is a subscription-based resource containing nearly 3,000 academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.

Contact us for annual subscription options:

Already a HeinOnline Subscriber?

profiles profiles most