Effects of the Tax Cuts and Jobs Act on State Individual Income Taxes

In December 2017, President Donald Trump signed into law PL 115-97, commonly known as the Tax Cuts and Jobs Act (TCJA), which substantially changed federal individual and corporate income taxes. Many of the income tax changes in the TCJA will affect state income taxes through existing links between the federal and state income tax laws.

This article analyzes the effect of the TCJA on state individual income taxes. We discuss the impact of the new law and simulate the change in taxes that would automatically occur in several illustrative states if they were to make no modifications to their own income tax rules. We find that the two elements of the TCJA that generate the largest changes to state individual income taxes are the increase in federal standard deductions (a large tax decrease), and the elimination of federal personal exemptions (a large tax increase). For states that link to both elements, the two changes mostly offset each other, although elimination of personal exemptions has a slightly larger effect. In contrast, states that only link to one of these elements of federal law will see more dramatic changes in state income taxes.

This article was originally published in the Washington University Journal of Law & Policy. The journal citation is listed below.

Huffer, Erin, John Iselin, Frank Sammartino, and David Weiner. 2019. “Effects of the Tax Cuts and Jobs Act on State Individual Income Taxes.” Washington University Journal of Law & Policy 58: 205-229.