The downward trend in income tax continues – Oklahoma Council of Public Affairs
Recent actions in North Carolina and Louisiana continue the downward tax trend seen across the country. The two states are changing their tax codes by simplifying their income tax structures and reducing rates for individuals and corporations.
Louisiana voters approved Amendment 2, reducing the personal income tax rate for every income bracket. The current rates are 2, 4 and 6 percent; the new rates will be 1.85, 3.5 and 4.25%.
For its part, North Carolina has passed a host of tax changes through HB 334. The bill reduces the corporate tax rate by 0.5 percentage points each year from 2024 until its complete elimination in 2028. The individual rate will drop from 5.25. percent to 4.99 percent. Individuals will also benefit from an increase in the standard and child deduction, and eligibility for the child deduction is expanded.
North Carolina is also preparing to simplify its franchise tax, resulting in reduced tax collections from $ 150 million to $ 170 million.
With the tax changes in North Carolina, the number of states that have passed some sort of income tax reform this year has grown to twelve. With the growth seen in states like Florida and Texas over the past decade, it’s no wonder states have started moving their tax structures away from income tax.
Oklahoma took a good first step last year by lowering personal and corporate tax rates, but it’s clear the work shouldn’t end there. If Oklahoma is happy to congratulate itself on last year’s work, it risks being left behind as more states continue to shift to a growth-friendly tax structure.