States across the country have been embracing tax relief for the last few years. This is also true in the Mountain States – with one notable exception. While Idaho and Montana enacted “historic” tax relief and reduced income tax rates (Wyoming reduced property taxes), Washington lawmakers instead decided to move in the opposite direction and imposed the state’s first income tax (starting on capital gains income).
Here is how the Tax Foundation describes the tax-cutting efforts across that nation:
“Since 2021, 24 states have cut individual income tax rates (including 22 reductions to top marginal rates), 13 states have cut corporate income tax rates, two have cut sales tax rates, and many more have made structural improvements . . .
These continued reforms are significant but should not be surprising. Many states continue to experience revenue growth and project further growth in coming years, and nearly all states anticipate revenues remaining well above pre-pandemic levels. And while state coffers are flush with cash, lawmakers are increasingly attuned to the value of tax competitiveness in an ever more mobile economy. With businesses and individuals alike better positioned than ever to take taxes into account in deciding where to live and work, lawmakers across the country are responding with pro-growth, pro-taxpayer reforms.”
While we wait to see where the tax reform conversation heads next in the Mountain States, here is a snapshot of the current tax rankings:
State Tax Collections Per Capita (Fiscal Year 2021) (Tax Foundation data)
State and Local Property Tax Collections Per Capita (Fiscal Year 2020) (Tax Foundation data)
Top Individual Income Tax Rate since 2021 (Tax Foundation data)
State and Local Sales Tax (Tax Foundation data)
Gas Tax (Tax Foundation data)
State Death Tax (Estate) (Tax Foundation data)
Liquor Tax (Tax Foundation data)
State and Local Cell Phone Tax (Tax Foundation data)
For the most part, the Mountain States are generally clustered near each other on their tax rankings except for Washington. Thankfully the states aren’t graded on a curve.