JEFFERSON CITY, Mo. (NEWSnet/AP) — Income, sales, property and gas taxes: Almost every U.S. state cut at least one such broad-based tax, as budget surpluses soared over the past three years.

Some states have made a permanent reduction in taxes. Others passed one-time rebates or temporary suspensions.

California, where financial swings are felt more sharply than most states, has a projected budget deficit of a record $68 billion, an amount exceeding its hefty reserves.

Other states also have had tax revenue decline and spending exceed forecasts. Arizona could face a $400 million shortfall in its 2024 fiscal year. Maryland’s legislative staff recently projected a $761 million budget deficit in 2025. Minnesota’s budget office says a projected $2.4 billion surplus for the current two-year budget cycle could flip upside-down in the next period, resulting in a more than $2 billion shortfall for fiscal years 2026-27.

 

State-level tax reductions are projected to result in $13.3 billion less in general revenue this year compared to what states otherwise would have collected, according to a recent report by National Association of State Budget Officers. That follows a $15.5 billion net tax reduction from the 2023 fiscal year.

About 80% of states passed some type of income tax break since 2021, according to a tally by The Associated Press. Those include cash-back plans, such as Delaware's $300 rebate and California’s rebate of $200 to $1,050 for individuals earning up to $250,000 and households up to $500,000.

The tally also includes targeted tax breaks, such as expanded deductions or credits for families with children and seniors on retirement incomes.

The past few years marked the largest wave of individual income tax rate reductions since states began enacting such taxes more than a a century ago, said Jared Walczk, vice president of state projects at the nonprofit Tax Foundation.

Alaska and Nevada are among nine states that levy no individual income tax. Alaska also has no statewide sales tax, instead relying heavily on oil revenue and earnings from investment funds.

The bulk of Nevada’s revenue comes from sales and gambling taxes, which fall largely on out-of-state travelers spending money in places like the Las Vegas Strip. As a result, Nevada’s revenue plummeted when the COVID-19 pandemic kept away tourists, then rebounded to produce a historic $11.6 billion biennial budget as tourists returned and inflation took hold.

Kansas lawmakers are expected to consider a range of proposals for reining in local property taxes, including a state constitutional cap on how much home values can rise annually for tax purposes, a cut in taxes on homes, and aid to cities and counties to replace property tax revenues.

Wyoming Gov. Mark Gordon is proposing a $20 million expansion of a property tax relief program as part of his 2025-26 budget. But he's also recommending the state stash more money in savings.

Follow us on Facebook and X platform to get our headlines in your social feeds.

Copyright 2024 NEWSnet and The Associated Press. All rights reserved.