KPMG report: Post-pandemic state tax policies
Factors to consider as the state fiscal policy landscape shifts in response to falling state tax revenue
State legislatures, buoyed by burgeoning revenue and growing reserves, enacted some significant tax cuts during the coronavirus (COVID-19) pandemic recovery. From 2021 to 2023, 25 states reduced individual (personal) income tax rates, 13 cut corporate income tax rates, and two reduced sales tax rates. And that’s not counting the myriad tax cuts through structural changes in deductions, credits, and so on.
In 2023, however, state revenue growth tailed off substantially, particularly when the effects of inflation are factored in. The question for taxpayers is whether states can sustain ongoing tax reductions or whether some states overshot the mark and created a structural imbalance that may force tax and expenditure adjustments.
Read a February 2024 report* [PDF 213 KB] prepared by KPMG LLP tax professionals that examines factors taxpayers may need to consider as the state fiscal policy landscape shifts in response to falling state tax revenue: Post-Pandemic State Tax Policies Are a Kaleidoscope in Motion
* This article originally appeared as a Bloomberg Tax Insight and is provided with permission. Published February 26, 2024. Copyright 2024 Bloomberg Industry Group 800-372-1033.