About 45 years have passed since a state last eliminated its income tax on wages and salaries. Two Southern states are now on a path to do so if their economies keeping growing.

About 45 years have passed since a U.S. state last eliminated its income tax on wages and salaries. But with recent actions in Mississippi and Kentucky, two states now are on a path to do so, if their economies keep growing.

The push to zero out the income tax is perhaps the most aggressive example of a tax-cutting trend that swept across states as they rebounded from the COVID-19 pandemic with surging revenues and historic surpluses.

But it comes during a time of greater uncertainty for states, as they wait to see whether President Donald Trump’s cost cutting and tariffs lead to a reduction in federal funding for states and a downturn in the overall economy.

Some fiscal analysts also warn the repeal of income taxes could leave states reliant on other levies, such as sales taxes, that disproportionately affect the poor.

  • partial_accumen@lemmy.world
    65·
    18 hours ago

    Mississippi is among the most impoverished states and relies heavily on federal funding. Democratic lawmakers warned the state could face a financial crises if cuts in federal funding come at the same time as state income tax reductions.

    Hey Mississippi, that federal funding is what DOGE is frequently classifying as “waste, fraud, and abuse”. You might want to wait until you see the smoking crater the trump administration will leave for federal funding for states before you cut off your locally controlled income source.