AT A TIME WHEN THE COST OF everything from gas to Netflix is rising, there's a good chance that one of your expenses will decline: your state tax bill.
Awash in budget surpluses, lawmakers are cutting taxes on everything from income to groceries, and the trend isn't limited to red states. Several Democratic governors, including New York Gov. Kathy Hochul and Illinois Gov. J.B. Pritzker, have supported broad tax cuts for state residents. "If your state isn't cutting taxes this year, it's in the minority," says Katherine Loughead, senior policy analyst To ha RE for the Tax Foundation, a tax research organization.
Some of the tax cuts are while others could temporary, permanently lower residents' tax bills. For example, Mississippi enacted legislation that will lower the state's top income tax rate from 5% to 4% by 2026, and Gov. Tate Reeves has indicated he'd like to eventually phase out the tax altogether. In April, Georgia Gov. Brian Kemp signed legislation that will consolidate the state's six income tax brackets into a flat rate of 4.99% as soon as 2029. The Peach State's highest income bracket is currently 5.75%. Iowa is lowering its top tax rate of 8.53% to a flat rate of 3.9% by 2026. "They're going from one of the highest income tax rates to a fairly competitive rate," Loughead says. Other targets of state tax cutters:
This story is from the July 2022 edition of Kiplinger's Personal Finance.
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This story is from the July 2022 edition of Kiplinger's Personal Finance.
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