Jeff Bush of The Washington Update, commenting on the new analysis, told ThinkAdvisor in an email that he watches “states for trends in tax theory because if states start to coalesce, it may give an indication of federal tax thinking.”
Lowering income tax rates, Bush said, “seems to be a trend in several states. This is a reaction to states being flooded with revenue during the pandemic resulting from higher-than-anticipated tax collections and federal supportive funds.”
Generally, Bush said, “I don’t like strategic tax reactions (lowering tax rates in perpetuity) for tactical swings in revenue that aren’t likely to repeat themselves over the long run. I tend to favor tactical reactions like tax rebates in these situations.”
See the gallery for five tax-related changes taking place in various states come July 1, as described by the Tax Foundation.
Income Tax
Senate Bill 417, enacted in May and taking effect July 1, allows Indiana counties to adopt local income taxes to pay for county staff expenses related to the state’s judicial system.
Payroll Tax
In Washington, a 0.58% payroll tax to fund a mandatory long-term care insurance program will take effect July 1, following litigation that resulted in various legislative changes and delays.
Capital Stock Tax
Oklahoma adopted H.B. 1039 in May. “This new law repeals the state’s corporate franchise (capital stock) tax, effective July 1. Currently, the tax is levied at a rate of 0.125%, with a maximum payment of $20,000,” according to the Tax Foundation.
Cannabis Tax
Maryland
Maryland has joined 22 other states in enacting legislation to legalize the recreational use of marijuana. Legal retail sales begin on July 1, at which time an excise tax will be levied on the retail price at a rate of 9%.
Minnesota
In Minnesota, sellers of cannabis products will be required to register with the state and begin collecting the new cannabis tax, which will be levied at a rate of 10% on the retail sales price.
Tennessee
Tennessee will implement a new 6% tax on retail sales of hemp-derived cannabinoids, including THC and CBD. The tax will be levied in addition to the 7% statewide general sales tax rate and any applicable local option sales taxes.
