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The US states where more and less taxes will be paid in 2023

2023-01-05T20:29:33.159Z


By 2023, some US states will see an increase in certain taxes, while others will see reductions. Why Uncle Sam wants to know if I sold my property abroad 5:07 (CNN) -- States are kicking off 2023 with a series of tax changes for their residents and businesses. According to the right-leaning Tax Foundation, significant changes went into effect in some 38 states on January 1, mostly net tax cuts. They lowered personal and corporate income tax rates, exempted more items from sales tax, and red


Why Uncle Sam wants to know if I sold my property abroad 5:07

(CNN) --

States are kicking off 2023 with a series of tax changes for their residents and businesses.

According to the right-leaning Tax Foundation, significant changes went into effect in some 38 states on January 1, mostly net tax cuts.

They lowered personal and corporate income tax rates, exempted more items from sales tax, and reduced the amount of taxable retirement or military pension income.

"We are at the culmination of two years of significant tax cuts across the country, in response to record high revenues and the desire of states to remain competitive in a much more mobile environment," said Jared Walczak, vice president of State Projects. from the Tax Foundation.

States have benefited from strong economic growth and the federal covid-19 relief funds that have reached them, their residents and their businesses.

This fueled increased income and sales tax collections, leaving many states with large surpluses.

Some states brought this abundance to residents through one-off measures, such as tax breaks or vacations, while others adopted permanent tax cuts.

  • Unanswered questions about Trump's tax returns

However, several states raised certain taxes, including those on gasoline, electric vehicles and recreational marijuana, by 2023. One state, Massachusetts, added a tax on millionaires.

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And while states have built up sizable reserve funds to cushion an economic downturn, some could start to feel pressured if their revenues shrink.

"States that cut their tax rates are going to have to face a more severe reduction in that (revenue) growth than other states," said Emily Mandel, economist at Moody's Analytics.

Below are the state taxes that are reduced

Individual income taxes

: Ten states, including Arizona, Idaho, Indiana, Iowa, Kentucky, Mississippi, Missouri, Nebraska, New York and North Carolina, have reduced individual income tax rates for 2023, according to the Tax Foundation.

New Hampshire lowered its rate only on interest and dividend income.

Arizona, Idaho, and Mississippi switched from tiered rates to flat taxes.

Arizona applied its 2.5% rate a year ahead of schedule.

Idaho moved to a flat rate of 5.8%, down from its previous top marginal rate of 6%.

And Mississippi enacted a flat 5% tax rate.

The fixed rate will be gradually reduced to 4% in 2026.

Five states (Alabama, Delaware, Iowa, Rhode Island, and Nebraska) exempted all or part of their residents' military retirement or pension income.

Iowa and Nebraska also eased their inheritance taxes.

Business income tax

: Four states lowered their business income tax rates for this year, according to the Tax Foundation: Arkansas, Nebraska, New Hampshire and Pennsylvania.

In Pennsylvania, the rate dropped from 9.99% to 8.99%, one of the highest in the country.

It is expected to be progressively reduced to 4.99% in 2031.

For its part, Oklahoma became the first state to make permanent a measure that allows companies to deduct the full cost of certain business investments in machinery and equipment during the first year.

The federal depreciation bonus is scheduled to begin phasing out this year due to a provision in the 2017 Republican tax cut package.

Sales Taxes

: Virginia now exempts groceries from the state sales tax, while Kansas has begun lowering its grocery sales tax, which is due to be eliminated in 2025, according to the Tax Foundation.

Colorado and Iowa no longer apply sales taxes on diapers and menstrual products, while Virginia exempts certain personal hygiene items, including menstrual products.

These are the state taxes that go up

Personal Income Taxes

: Massachusetts voters narrowly approved a tax on millionaires at the polls in November.

The measure, which went into effect this year, adds a 4% surcharge on income above $1 million to the current 5% personal income tax rate.

The funds will go towards education, roads, bridges and public transport.

Sales Taxes and Fees

: In Kentucky, nearly three dozen additional services are now subject to the 6% state sales tax, according to the state Department of Revenue.

These include recreational camp tuition, personal fitness, interior decorating, clothing and jewelry repair, website design and hosting, parking, cosmetic surgery and body modification, space rental, and supervision of security systems, among others.

The state also imposed a 6% excise tax on carpooling, car rentals, and limousine and taxi services.

In addition, it created a special tax on electric vehicle power distribution, as well as registration and renewal fees for owners of electric and hybrid vehicles.

Colorado has implemented a state fee of 10 cents for each recycled paper bag or single-use plastic bag that stores provide to customers, according to the state Department of Revenue.

Starting this year, stores will no longer be able to distribute plastic bags.

New Jersey increased the excise tax on recreational marijuana from $1.10 to $1.52 per ounce.

And Missouri now requires out-of-state businesses with more than $100,000 in annual sales in the entity to collect state and local taxes.

It is the latest state with a sales tax to put this requirement into effect.

Gas Taxes

: Five states (Florida, Illinois, Michigan, North Carolina, and Utah) increased their gas taxes, either by indexing for inflation or by automatic adjustments tied to fuel prices, according to the Tax Foundation.

On the other hand, in New York and Connecticut the holiday taxes on gasoline ended.

Taxes

Source: cnnespanol

All news articles on 2023-01-05

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