Notes and Sources: Fiscal Cliff Fact Sheets

Notes and Sources: Fiscal Cliff Fact Sheets

a The following states do not levy a personal income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.

b Tax revenue impact in states that allow taxpayers to deduct federal income taxes. Increased federal taxes would lead to higher deductions on the state tax return, and thus lower tax revenue, in these states.

c Tax revenue impact in states that are automatically linked to one or more of the various “above-the-line” and “below-the-line” federal deductions that are scheduled to be reduced or eliminated. Lower deductions would lead to higher state taxable personal income, and thus higher tax revenue, in these states. Some states without arrows may be impacted by the scheduled changes. Based on Pew analysis of available sources, the potential impact could not be identified at the time of writing. See The Impact of the Fiscal Cliff on the States, endnote 25.

d Tax revenue impact in states that are automatically linked to this credit. The scheduled reduction of this credit would lead to higher state taxable personal income, and thus higher tax revenue, in these states. Two additional states had state EITCs in law but the credit was suspended (Colorado) or not yet implemented (Washington) as of 2011. States may be affected by linkages to other federal tax credits scheduled to change under the fiscal cliff that are not addressed in this analysis.

e The following states do not levy a corporate net income tax: Nevada, Ohio, South Dakota, Texas, Washington, and Wyoming.

f Tax revenue impact in states that are automatically linked to either: 1) federal bonus depreciation rules, or 2) enhanced expensing rules. The scheduled expiration of these provisions would lead to higher state taxable corporate income, and thus higher tax revenue, in the near term in these states. Some states without arrows may be impacted by the scheduled changes. Based on Pew analysis of available sources, the potential impact could not be identified at the time of writing. States may be affected by linkages to other federal corporate income tax provisions scheduled to change under the fiscal cliff that are not addressed in this analysis.

g Tax revenue impact in states that are automatically linked to either: 1) the exclusion amount, or 2) the federal credit for state estate taxes. The scheduled reduction in the exclusion amount would lead to an increase in the taxable value of estates, and thus higher tax revenue, in the states linked to the exclusion amount. The scheduled return of the credit would lead to the automatic reinstatement of state estate taxes, and thus higher tax revenue, in the states linked to the credit.                                   

New Mexico's allowable credit is reduced by the amount of the federal credit claimed. Thus, the scheduled federal reduction of this credit would lead to higher state credit amounts claimed, and thus lower tax revenue, in New Mexico.

**Grants calculations exclude funds that would be sequestered in FY 2013 but would be disbursed October 1, 2013, at the start of FY 2014.

*The data for Maryland, Virginia, and the District of Columbia are combined due to the high percentage of commuters in the area.

SOURCES: Institute on Taxation and Economic Policy, Why States That Offer the Deduction for Federal Income Taxes Paid Get It Wrong, August 2011; Federation of Tax Administrators, State Personal Income Taxes: Federal Starting Points, January 2012, and Range of State Corporate Income Tax Rates, February 2012; Tax Credits for Working Families, States with EITCs; National Women's Law Center, Making Care Less Taxing: Improving State Child and Dependent Care Tax Provisions, April 2011, and February 2012 memorandum, Developments in Federal and State Child and Dependent Care Provisions in 2011; Commerce Clearinghouse, 2012 State Tax Handbook, Chicago, IL: CCH, 2011; Urban-Brookings Tax Policy Center, Back from the Dead: State Estate Taxes After the Fiscal Cliff, November 2012. Pew analysis of Federal Funds Information for States, Census Bureau State and Local Government Finances Survey, Bureau of Labor Statistics, Office of Personnel Management, Census Bureau Consolidated Federal Funds Report, and Bureau of Economic Analysis data.

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