Who Benefited from 2022's Many State Tax Cuts and What is in Store for 2023?

Thirty-five states and the District of Columbia passed significant tax cuts in calendar year 2022. However, the design and effect of those tax cuts varied significantly. Using the Tax Policy Center state income tax model, we analyzed three major types of individual income tax cuts—tax rate cuts, refundable tax credits, and one-time tax rebates—by examining tax legislation in Connecticut, Delaware, Misssissippi, Utah, and Vermont. As state policymakers prepare to navigate an uncertain economic and fiscal future, they should understand how previous tax cuts affected state revenue collections and benefited, or did not benefit, different types of households.

This publication was updated on February 6, 2023. The original version noted that both the Connecticut governor (temporarily, via directive) and legislature (permanently, via legislation) increased the state’s EITC match rate to 41.5 percent. However, the legislature repealed its EITC increase in subsequent legislation. This version only describes the governor’s action. None of the estimates of the distributional effect of Connecticut’s overall tax cut were changed.