States are always looking for ways to attract new businesses and prevent existing ones from pulling up stakes. Lowering corporate taxes is one way to do it. So is reducing income taxes for workers.
2024 will see a bevy of changes to tax rates that finance pros will want to know about. Seventeen states are cutting either the corporate or individual income tax, and in some cases both, according to the Tax Foundation.
Arkansas, Iowa, Kansas, Nebraska, New Jersey and Pennsylvania legislatures reduced corporate income tax rates and/or other business taxes. New Jersey’s rate drops from a staggering 11.5% to 9% for 2024. Whether that’ll help improve the Garden State’s dead-last ranking for business climate, we’ll see.
Corporate tax rates are dropping from 5.3% to 4.8% in Arkansas, 8.4% to 7.1% in Iowa, 7% to 6.5% in Kansas, 7.25% to 5.84% in Nebraska and 8.99% to 8.49% in Pennsylvania. (Arkansas, Iowa and Nebraska also reduced their individual income tax levels.)
Here are some significant changes to business taxes for 2024:
- Florida business taxpayers will enjoy paying less on business rent
- Fewer Texas entrepreneurs will be liable for business taxes. Lawmakers doubled the “no tax due” threshold for the Lone Star State’s franchise tax.
- Same goes for businesses in Ohio, where the commercial activity tax gross receipts threshold was raised.
Where will workers catch a break?
The states lowering their individual income tax rates are:
- Arkansas – down from 4.9% to 4.4%
- Georgia – 5.75% to 5.49%
- Indiana – 3.15% to 3.05%
- Iowa – 6% to 5.7%
- Kentucky – 4.5% to 4%
- Mississippi – 5% to 4.7%
- Missouri – 4.95% to 4.8%
- Montana – 6.75% to 5.9%
- Nebraska – 6.64% to 5.84%
- New Hampshire – 4% to 3%
- North Carolina – 4.75% to 4.5%
- Ohio – 3.99% to 3.50%, and
- South Carolina – 6.5% to 6.4%.
Two of these states – Montana and Ohio – also increased their minimum wage rates. Upwards of 10 million low-income workers in 22 states will see minimum wage increases in 2024.
And finally, some tough news for California and Michigan employees. Both of those states are raising the individual income tax rate to pay for budget shortfalls. The Golden State’s rate is increasing from 13.3% to 14.4% while the Wolverine State’s rate inches up from 4.05% to 4.25%.
