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Dive brief:
- Companies and individuals will see it income tax cuts in 17 states this year, with some of those changes already in place as of Jan. 1 and others set to go into effect on July 1, which is the start of the tax year in many states, according to the Tax Foundation non-profit, a company based in Washington, DC. think tank.
- Companies in six states – Arkansas, Iowa, Kansas, Nebraska, New Jersey and Pennsylvania will enjoy lower corporate income tax bills, while 14 states, many in the South, will see individual income tax cuts come into effect in effect this year.
- The changes come amid a flurry of tax changes in 34 statesaccording to the foundation, whose stated mission is to promote economic growth through fiscal policies. ““Recent years have seen a wave of major fiscal reforms, including rate reductions and tax cuts, as states emerged from the pandemic with revenue surpluses and curbed inflation,” according to a release in Tax Foundation blog by Manish Bhatt and Benjamin Jaros.
Diving knowledge:
The drop in corporate tax rates varies from state to state.
Of the half-dozen states cutting their corporate income tax rates, Arkansas will drop to the lowest level, with the top marginal corporate income tax rates in state fall to 4.8% this year from 5.3% last year, according to the Tax Foundation. In contrast, New Jersey rates will drop to 9%, but from a higher level of 11.5%. Meanwhile, business rates in Kansas will jump from 7% to 6.5%, Nebraska’s from 7.25% to 5.84%, and Pennsylvania’s to 8.49% from 8.99%.
Other states have taken different measures to ease the tax pressures on businesses. Florida lowered its commercial rent tax rate, Ohio raised its gross receipts threshold for the business activity tax, and Texas is doubling the so-called “tax-free” threshold for the business tax. state franchise.
States where residents will enjoy personal income tax reductions are: Arkansas, Connecticut, Georgia, Indiana, Iowa, Kentucky, Mississippi, Missouri, Montana, Nebraska, New Hampshire (only interest income and dividends), North Carolina, Ohio and South. Carolina.
Not all state taxes are going down. Michigan residents will see their top individual income tax marginal rate rise to 4.25% from 4.05%.
