Several states – including Arkansas, Colorado, Indiana, Iowa, and Mississippi – have cut corporate income taxes in recent years and are planning another cut, while New Jersey retroactively increased the surcharge for corporate taxable income greater than $ 1 million, according to a tax foundation has extended study.
Corporate tax rates in 44 states range from 2.5% in North Carolina to 11.5% in New Jersey, with Alaska, Illinois, Iowa, Minnesota, and Pennsylvania also requiring top tax rates of 9% or more, according to the study.
Ten states have the highest corporate tax rates of 5% or less: Arizona, Colorado, Florida, Kentucky, Mississippi, Missouri, North Carolina, North Dakota, South Carolina, and Utah, the Tax Foundation said.
Last year’s sharp recession caused by the coronavirus undercut the state’s tax revenues by around $ 22 billion at the end of fiscal 2020, which most states saw in June. This emerges from a report by the Center for Budgetary and Political Priorities.
States face challenges in funding services such as education and health care. By October, both states and municipalities had 1.2 million workers on leave or laid off, the center said.
CFO Dive / data from the Tax Foundation
“States, localities, tribal nations and US territories will have deficits between $ 480 billion and $ 620 billion by 2022 and could be even higher in the event of a double-dip recession,” the center said.
President Biden has proposed $ 350 billion for state and local governments as part of a proposed $ 1.9 trillion coronavirus relief package. A $ 618 billion counterproposal released by 10 Republican senators on Feb.1 does not include such aid.
Despite budget burdens, several states have cut corporate taxes and are planning further cuts, according to the tax foundation.
Voters in Colorado voted in November to cut corporate tax from 4.63% retroactive to January 1, 2020 to 4.55%. Indiana cut the tax rate to 5.25% on July 1, 2020 and plans to drop it to 4.9% on July 1, 2020. 2021, according to the tax foundation study.
Nevada, Ohio, Texas, and Washington all levy gross income taxes instead of corporate taxes. South Dakota and Wyoming are the only states that do not levy gross income tax or corporate income tax, the study says.