A year ago, those who believed that states could weather the pandemic without significant tax increases were dismissed as Pollyannas. But halfway through 2021, we are in the midst of the largest wave of individual income tax rate reductions in more than two decades, buoyed by robust revenue growth and policymakers’ appreciation of the game-changing impact of the remote work revolution.
Eleven states have cut income taxes thus far in 2021. Ten cut individual income taxes, and four of those (plus one other) cut corporate income tax rates. At least two more states may join them before the year is out, including North Carolina, where lawmakers are contemplating not only individual income tax relief but outright repeal of the state’s corporate income tax. This is a Trend with a capital T, and how it came about, not just despite but because of a global pandemic, is worth understanding.