A wave of state tax changes took effect on July 1, and depending on where you live, they could impact your monthly finances. From fuel and income tax adjustments to new sales tax exemptions and updates to the SALT deduction, these changes may affect everything from your take-home pay to the price you pay at the pump.
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Here’s a breakdown of the most important updates — and how they might affect your wallet.
Effective July 1, excise changes were implemented across states for individuals and businesses. Overall, the majority of the states increased their gas and transportation taxes, tobacco taxes and cannabis taxes.
States like Alabama, Illinois, Minnesota, Missouri and Nebraska increased fuel taxes, whereas California’s gas tax rates decreased. In addition, Hawaii implemented a road usage charge for EVs.
“Fuel taxes are directly tied to the price consumers and businesses pay at the pump,” said Lisa Green-Lewis, CPA and tax expert with Intuit TurboTax. “For freight companies, delivery services and ride-share providers, increases in fuel costs could be passed on to customers in the form of higher prices for goods and services.”
That means if you live in one of the states with increased fuel taxes, you may need to budget more for gas, goods and services, while if you live in California, you may get a little extra breathing room.
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“Arkansas and Kansas are two of the states that will expand the sales use tax exemption for data centers, which could provide incentives for more businesses in those states,” Green-Lewis said.
While this might not immediately impact your budget, it may be good news for those who live in those states who are looking for a new job.
South Carolina is reducing the top marginal tax rate and many states are expected to make changes to income tax rates in the coming months. Green-Lewis outlined how changes to income taxes can affect you so that you can plan ahead.
In states where income taxes are decreased:
Take-home pay can increase, allowing consumers to save, invest or spend more.
Increased consumer spending may drive local economic growth.
States reducing income taxes may attract new residents, particularly from high-tax states.
Lower tax revenue may reduce funding for public services like education, infrastructure maintenance or healthcare.
finance.yahoo.com
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