Key Takeaways:
- Given the unprecedented revenue surpluses in states across the country, it’s no surprise that many of those states chose to use a portion of their surplus to reduce tax rates.
- In recent years, thirteen states have reduced their corporate income tax rates since 2018, and several of those states reduced their rate more than once.
Given the unprecedented revenue surpluses in states across the country, it’s no surprise that many of those states chose to use a portion of their surplus to reduce tax rates. While the trend of reducing tax rates is not a new one, it’s certainly accelerated in recent years. Over the past five years, a record number of states have enacted corporate income tax reductions. Below is a summary of states which have enacted corporate rate cuts since 2018. This report only includes measures that were enacted since 2018, not rate changes that may have been triggered or planned to phase in due to legislation enacted prior to 2018.
Thirteen states have reduced their corporate income tax rates since 2018, and several of those states reduced their rate more than once. State lawmakers enacted 23 total bills during this period. When comparing partisan makeup, nine of these states were Republican trifectas, one state was a Democratic trifecta, and three states were under divided government. See the map and table below for a complete description of each income tax reduction since 2018.
Year | State | Political Makeup | Bill Number | Summary |
2022 | Arkansas | Republican Trifecta | HB 1002 A | Accelerates the previously planned corporate income tax cuts which reduce the top marginal rate from 5.7 percent to 5.3 percent (such that cuts that were to take effect in 2025 shall become effective in 2023. |
2022 | Colorado | Democratic Trifecta | Initiative 31 | Ballot measure to reduce the corporate income tax rate from 4.55 to 4.4 percent. Effective retroactively to January 1, 2022. |
2022 | Idaho | Republican Trifecta | Idaho HB 436 | Reduces the flat corporate income tax rate from 6.5 to 6 percent. Effective retroactively to January 1, 2022. |
2022 | Idaho | Republican Trifecta | HB 1A | Reduces the corporate income rate from 6 to 5.8 percent. |
2022 | Iowa | Republican Trifecta | HF 2317 | Uses revenue triggers to decrease the corporate income tax rate from 9.8 percent to as low as 5.5 percent. The magnitude of each rate cut depends on corporate income tax collections. |
2022 | Nebraska | Republican Trifecta | LB 873 | Reduces the top marginal corporate income tax rate from 7.5 percent to 7.25 percent on January 1, 2023. The rate will continue to decrease an average of 0.33 percentage points per year until it reaches 5.84 percent on January 1, 2027. |
2022 | New Hampshire | Republican Trifecta | HB 1221 | Reduces the Business Profits Tax from 7.6 percent to 7.5 percent effective tax year 2024.
|
2022 | Pennsylvania | Divided:
D Governor +
R Legislature | HB 1342 | Reduce the corporate net income tax rate from 9.99 percent to 8.99 percent on January 1, 2023. Each year thereafter the rate will decrease 0.5 percentage points until it reaches 4.99 percent at the beginning of 2031. |
2022 | Utah | Republican Trifecta | SB 59 | Reduces the corporate income tax rate from 4.95 percent to 4.85 percent. |
2021 | Arkansas | Republican Trifecta | AR SB 1B / AR HB 1001B | Phases down the corporate income rate down from 5.9% to 5.3 percent by 2025 unless a transfer is made to the Catastrophic Reserve Fund between July 1, 2022, and January 1, 2024. |
2021 | Idaho | Republican Trifecta | HB 380 | Reduces the state’s flat corporate income tax rate and top marginal individual income tax rate from 6.925 percent to 6.5 percent. |
2021 | Louisiana | Divided Government:
Democratic Governor +
Republican Legislature | HB 292 | Consolidates five corporate income tax brackets into three, and reduces the top rate from 8 percent to 7.5 percent, effective in 2022. |
2021 | Nebraska | Republican Trifecta | NE LB 432 | Reduces the higher of the state’s two marginal corporate income tax rates from 7.81 percent to 7.25 percent in 2023. The bill also expresses the intent to pass additional legislation reducing the rate to 7 percent for TY 2024 and to 6.84 percent for TY 2025, though these reductions are not guaranteed without future legislative action. |
2021 | North Carolina | Divided:
D Governor +
R Legislature | SB 105 | Gradually phases out the corporate income tax until it’s eliminated in 2030. |
2021 | New Hampshire | Republican Trifecta | NH HB 2 | Reduces the corporate income tax (BPT) from 7.7 to 7.6 percent. |
2021 | Oklahoma | Republican Trifecta | HB 2960 | Reduces the corporate income tax rate from 6 percent to 4 percent. |
2020 | Colorado | Democratic Trifecta | Proposition 116 | Reduces the income tax rate from 4.63 to 4.55 percent, effective for tax years beginning January 1, 2020. |
2019 | New Hampshire | Republican Trifecta | HB 4 | Gradually reduces the business profits tax rate from 7.7 percent to 7.5 percent over a period of three years. |
2019 | Utah | Republican Trifecta | SB 2001 | Reduces the corporate income tax rate from 4.95 to 4.66 percent. |
2018 | Idaho | Republican Trifecta | HB 463 | Reduces the corporate income tax rate from 7.4 percent to 6.925 percent. |
2018 | Missouri | Republican Trifecta | SB 884 | Reduces the corporate income tax rate from 6.25 to 4 percent. |
2018 | Kentucky | Republican Trifecta | HB 487 | Reduces the corporate income tax rate from a top marginal rate of 7 percent to a flat 5 percent rate. |
2018 | Utah | Republican Trifecta | HB 293 | Reduces the corporate income tax rate from 5 to 4.95 percent. |
Click here for a PDF version of this report.
Get Help Navigating State Tax Policy
Tax policy can be one of the most challenging areas for government affairs executives. MultiState’s team understands the issues, knows the key players, and helps you effectively navigate and engage. We offer a customized, strategic solution to help you develop and execute a proactive multistate tax legislative agenda. Our experts provide guidance for your tax and government affairs teams and create and refine advocacy collateral to support your efforts. Explore more of MultiState’s Tax Policy Services here.
-c69760-1200px.jpeg)
