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2019 State Tax Updates.

With a groundbreaking shift in taxable nexus through the decision in South Dakota v. Wayfair, Inc., and with federal adjustments continuing to stem from implementation of the Tax Cuts and Jobs Act (TCJA), several states are moving forward with tax rate changes at both the individual and corporate levels. The updates outlined below are generally considered to be just the beginning of state-level shake-ups, as newly prominent issues such as marijuana and sports betting emerge in the business world, forcing states to consider the inevitable tax implications of both.


Low-income tax relief legislation went into effect, decreasing the top rate for the lowest rate schedule (income between $12,600 and $20,999) from 4.4 to 3.4 percent. The lowest bracket of the next rate schedule (filers earning between $21,000 and $75,000) will see a rate drop from .9 to .75 percent. 4.4% [right arrow] 3.4%


A recently adopted tax reform package took effect, eliminating one individual income tax bracket and decreasing the top rate from 5.9 to 5.4 percent. Further state tax reform is slated for 2020, which will permit a corporate rate reduction from 6.25 to 4 percent.

5.9% [right arrow] 5.4%


A franchise tax phasedown continued with a rate reduction from 2.5 to 2.25 mills. The phasedown began in 2018 and will continue through 2028. Federal self-employment deductions by individuals are also expected to rise.

2.5 mills [right arrow] 2.25 mills

New Hampshire

Both state business tax rates were reduced. The business profits tax declined from 7.9 to 7.7 percent. The business enterprise tax declined from .675 to .6 percent.

7.9% [right arrow] 7.7%


Both the corporate and top marginal individual tax rates decreased from 6 to 5.75 percent. This was done to offset additional revenue from base-broadening provisions of the TCJA.

6% [right arrow] 5.75%

North Carolina

The individual income tax and corporate tax rates both decreased. The individual income tax rate fell from 5.499 to 5.25 percent. The corporate income tax rate dropped from 3 to 2.5 percent, the nation's lowest state-level corporate rate.

5.499% [right arrow] 5.25%

Wayfair Effect

Georgia, Iowa, Louisiana, Nebraska, and Utah all began collecting sales tax from remote sellers, after the decision in South Dakota v. Wayfair, which altered the standard of taxable nexus as it pertains to the physical presence rule. A total of 25 states now collect sales tax from remote sellers.


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Title Annotation:BY THE NUMBERS
Publication:Tax Executive
Date:Mar 1, 2019
Previous Article:Richard Pettigrew.
Next Article:The Tax Cuts and Jobs Act: Introduction: It's complex, sometimes unclear, but undeniably important.

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