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2014 Tax Change Proposals

2014 State Tax Change Proposals

5/12/2014

Proposals Under Consideration in 2014 Legislative Sessions

cashBuilding on the interest in tax changes that was prominent in 2013, a spring 2014 survey of legislative fiscal offices found that 23 states reported significant tax change measures were being discussed in 2014 legislative sessions. In general, these tax change proposals include personal and corporate income tax reductions and providing tax credits for targeted industries. Examples of tax changes that have been enacted or are still under consideration include:

Enacted

  • Lawmakers in Missouri and Oklahoma passed personal income tax rate reductions that are contingent upon each state meeting future revenue growth targets.
  • Indiana enacted legislation that phases down the corporate income and financial institutions tax rates. The corporate income tax rate will be reduced from 6.5 percent in fiscal year (FY) 2016 to 4.9 percent beginning in FY 2022; and the financial institutions tax rate will be reduced from 6.5 percent in calendar year (CY) 2018 to 4.9 percent beginning in CY 2023.
  • Lawmakers in New York included several tax changes in the enacted budget, including a 20 percent property tax credit for manufacturers.
  • Arizona lawmakers added a sales tax exemption for manufacturers’ electricity purchases.

Proposed

  • California lawmakers are considering a proposal to increase the motion picture tax credit and to make the credit permanent.
  • Numerous tax changes are under discussion in Illinois as temporary tax increases are set to expire in 2015.
  • Michigan is considering several bills that would reduce the income tax as well as reinstate a variety of credits, exemptions and deductions that were repealed in a 2011 tax reform package.
  • Nevada did not have a regular legislative session in 2014, however, voters will decide on a ballot measure that would create a new business tax at a rate of 2 percent of the taxable margin for businesses with more than $1 million in total revenue.  If approved by voters, it becomes effective in 2015.

The following table provides more information on state tax changes under consideration in 2014 legislative sessions. 

The box allows you to conduct a full text search or use the dropdown menu option to select a state.

Significant Tax Change and Tax Reform Measures Under Consideration in 2014 Legislative Sessions

Jurisdiction

No

Yes

Don’t Know

Comments

Alabama

X

 

 

 

Alaska

 

X

 

A referendum on recently enacted FY 2014 oil tax changes will be on the next ballot. The Legislature is reviewing tax systems for natural gas.

Arizona

 

X

 

Arizona is adding two tax provisions: a sales tax exemption for manufacturers’ electricity purchases ($18 million); and up to $10 million in tax credits for manufacturers’ own renewable energy facilities.

Arkansas

 

 

X

Tax cuts already enacted in the 2013 regular session are estimated to reduce general revenue collections by $10.2 million for FY2014, $85.2 million for FY2015 and $141.3 million for FY2016.

California

 

X

 

Among other proposals, Assembly Bill 1435 would increase the amount of the motion picture production tax credit (currently $100 million per year) and make the credit permanent.

Colorado

X

 

 

 

Connecticut

X

 

 

 

Delaware

 

X

 

The Legislature is considering a $0.10 increase in the gas tax.  The Legislature is also considering increasing the annual tax on limited liability companies, limited partnerships and general partnerships from $250 to $300 and possibly increasing the minimum annual corporation franchise tax from $75 to $175.

District of Columbia

 

X

 

The District’s tax revision commission recently announced recommendations to the District's tax code. In his FY 2105 budget, the mayor proposed creating a new personal income tax bracket of $40,000-$60,000 to be taxed 1 percent lower than the current rate, and a 0.5 percent reduction to the business franchise tax. The D.C. Council is considering measures to further reduce the personal income tax, increase the standard deduction and personal exemptions to conform with the federal government, and increase the local EITC for single earners (D.C. already has a local EITC for working families). The council lowered the sales tax rate 0.25 percent to 5.75 percent last year making the District's sales tax lower than neighboring Maryland and Northern Virginia. 

Florida

 

 

 

 

Georgia

X

 

 

 

Hawaii

 

X

 

Numerous tax credits and income tax proposals have been introduced

Idaho

 

X

 

The Legislature created a mechanism that would allow the state to capture the amount collected from online retailers and set it aside for future tax relief if federal legislation passes.

Illinois

 

X

 

A number of various tax changes are being discussed as a result of temporary tax increases that are scheduled to expire in January 2015. It is still too early, however, to know what direction lawmakers will take. 

Indiana

 

X

 

Legislation was signed by the governor that includes phasing-down the corporate income and financial institutions tax rates. The corporate income tax rate will be reduced from 6.5 percent in FY 2016 to 4.9 percent beginning in FY 2022, and the financial institutions tax rate will be reduced from 6.5 percent in calendar year (CY) 2018 to 4.9 percent beginning in CY 2023. Currently, the corporate income tax rate is being lowered from 8.5 percent in FY 2012 to 6.5 percent beginning in FY 2016; and the financial institutions tax rate is being lowered from 8.5 percent in CY 2013 to 6.5 percent in beginning CY 2017.

Iowa

X

 

 

 

Kansas

X

 

 

 

Kentucky

X

 

 

 

Louisiana

X

 

 

 

Maine

X

 

 

 

Maryland

 

X

 

Significant tax legislation includes a proposal to re-couple with the unified credit under the federal estate tax; a proposal to sell tax credits against future insurance premium taxes or corporate income taxes; and proposals to expand or extend a sustainable communities tax credit, a film tax credit and a research and development tax credit.

Massachusetts

X

 

 

 

Michigan

 

X

 

Bills have been submitted to reduce the income tax rate as well as reinstate a variety of credits, exemptions and deductions that were repealed in a 2011 tax reform package. The Legislature has also just revised a reform plan which will reduce general fund revenue to provide relief from personal property taxes.

Minnesota

 

X

 

Tax reform is likely to repeal some base broadening of the sales tax enacted in 2013. Other changes already adopted include more conformity of Minnesota's income tax with federal income tax.

Mississippi

 

X

 

Legislation was passed during the 2014 regular session that could potentially have a positive or negative impact on general fund revenue collections. Legislation that could have a significant impact includes: exempting engineering services from contractor’s tax; authorizing a credit for costs paid by a company in relocating national or regional headquarters to the state; authorizing alternative apportionment (due from the governor); exempting sales of firearms, ammunition and hunting supplies from sales tax during Mississippi Sportsman’s Weekend; apportioning income tax for pharmaceutical supplies; exempting from sales tax certain tractor trailers (due from the governor); and revising oil severance distribution.

Missouri

 

X

 

There are various tax cut bills moving in the House and Senate.

Montana

X

 

 

No regular 2014 session.

Nebraska

 

X

 

A number of measures are under consideration, including, but not limited to, indexing tax brackets and Social Security exemptions.

Nevada

 

X

 

No regular 2014 session. An initiative petition was circulated and submitted that will appear on the ballot for consideration by voters in the 2014 general election. It  would create a new business tax at a rate of 2 percent of the taxable margin for businesses with more than $1 million in total revenue. If approved by voters, the new margin tax becomes effective Jan. 1, 2015, but tax payments will not be remitted until late fiscal year 2016.

New Hampshire

X

 

 

 

New Jersey

 

X

 

Taxing e-cigarettes as tobacco products.

New Mexico

X

 

 

 

New York

 

X

 

The enacted budget contained several tax changes including: corporate tax reform (combining corporate franchise tax with bank tax, eliminating AMT and capital base calculations); manufacturers tax reductions (0 percent entire net income in corporate franchise tax, 20 percent property tax credit); estate tax reform (phase-in up to federal exemption amount); and a property tax reduction credit.

North Carolina

X

 

 

 

North Dakota

X

 

 

 No regular 2014 session.

Ohio

 

X

 

The governor has proposed reductions in income tax rates, and increases in tax rates for the severance tax on oil and natural gas, the commercial activity tax (a gross receipts tax on businesses) and tobacco taxes.

Oklahoma

 

X

 

The Legislature is considering a top bracket income tax rate reduction.

Oregon

 

X

 

The governor is in the early stages of exploring potential reform options.  Do not expect major proposals until 2015 legislative session at earliest.

Pennsylvania

X

 

 

 

Puerto Rico

X

 

 

 

Rhode Island

 

 

X

 

South Carolina

X

 

 

 

South Dakota

X

 

 

 

Tennessee

X

 

 

 

Texas

 

 

 

No regular 2014 session.

U.S.V.I.

 

 

 

 

Utah

X

 

 

 

Vermont

X

 

 

 

Virginia

X

 

 

 

Washington

 

 

X

The Washington state Supreme Court has ruled the Legislature has not met its obligation to fully fund K-12 education and directed the Legislature to provide up to $4 billion per year in additional resources for K-12 by FY 2018. In the 2013 and 2014 legislative sessions, the executive and House of Representatives proposed generating additional tax revenues by eliminating or reducing tax expenditures. These have not been enacted. In order to meet the supreme court's finding, additional revenue will likely be considered.

West Virginia

 

X

 

There was discussion of increasing property taxes to help offset the elimination of food sales tax revenue. The business franchise tax was eliminated for years beginning on or after Jan. 1, 2015, after a phase-out period. The corporate net income taxable rate was phased down to 6.5 percent for years beginning on or after Jan. 1, 2014. The lottery program continued to add new games and licensed properties, as well as permitting the use of promotional credits to encourage patronage in an attempt to generate maximum revenue.

Wisconsin

 

X

 

Reform measures include income tax rate reductions; a change to withholding tables and property tax relief.

Wyoming

X

 

 

 

Source: NCSL survey of legislative fiscal offices, spring 2014.

 

 

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