IRS: This year’s tax season will be… challenging. Filing season officially opens Jan. 24 and taxpayers will have until April 18 to file. But be prepared to wait for your refund. IRS officials warn services could be delayed due to the ongoing pandemic and budget constraints. And the agency says electronic filing with direct deposit “is more important than ever this year.” The IRS urges those who received Economic Impact Payments or advance Child Tax Credits last year to avoid delays by reporting the correct amount on their tax returns.
Speaking of the Child Tax Credit. The Washington Post reports Senate Democrats are still trying to restore the now-expired expansions of the Child Tax Credit in the next iteration of President Biden’s Build Back Better bill. Sen. Michael Bennet said, “On January 15, I think people are going to see it go away and they’re gonna wonder what happened to it.”
Cannabis tax revenue gets higher. The Marijuana Policy Project reports as of last December, 18 states collected a combined total of $10.4 billion in tax revenue from legal, adult-use cannabis sales. On top of that, cities and towns have collected hundreds of thousands of dollars from their own revenue from local cannabis taxes.
Indiana’s revenue surplus fuels GOP lawmakers’ hopes for a tax cut this year. The State Budget Agency reports December tax collections hit $1.66 billion, $19 million more than anticipated mid-month. Through the first six months of its budget year, revenues topped estimates by about $825 million. House Speaker Todd Huston announced a Republican plan to permanently cut business and personal taxes by more than $1 billion. The plan would gradually reduce the state's personal income tax rate from 3.32 percent to 3 percent by 2026.
Mississippi’s tax collections are up this year, too. The Legislative Budget Office shows revenue increased by 11 percent from July through December compared to the same period in 2020. Corporate tax collections rose 26 percent and sales tax collections nearly 22 percent. Gov. Tate Reeves said last week he wants to repeal the state’s income tax.
Taxing Business Income; tune in today at 12:30. In an online event, TPC’s Bill Gale and the Brookings Institution’s John Sabelhaus will discuss their new research on income reported in the Survey of Consumer Finances but not reported for tax purposes. How does that affect income distribution and revenues? TPC’s Janet Holtzblatt and the Federal Reserve Board’s Alice Henriques Volz will talk about the findings. Register and watch here.
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