Summer has arrived, and many states are starting to roll out new tax policies that were passed earlier this year or are being phased in gradually. While most individual and corporate state tax changes kick in on January 1 for consistency, some key updates begin on July 1, aligning with the fiscal year start for most states (except Alabama, Michigan, New York, and Texas).
This July, significant tax changes are taking effect in various states. In Maine, property tax adjustments will impact homeowners. In Wyoming, marketplace facilitators and remote sellers will face new economic nexus thresholds. Additionally, seven states—Colorado, Georgia, Idaho, Indiana, Kansas, Utah, and West Virginia—have enacted tax changes that are retroactive to January 2024. Several states are also introducing important excise tax updates.
This overview highlights major tax policy changes across states, focusing on structural adjustments like rate and threshold changes, new tax implementations, and significant shifts in tax bases. Note, that this list is not exhaustive but covers key changes affecting many taxpayers.
What Are the Latest Tax Changes Across Various States in 2024?
You might be interested in the recent tax changes that have been implemented across various states in 2024. These changes include individual and corporate income tax rate cuts, sales tax holidays, property tax adjustments, and excise tax changes. Here’s a detailed breakdown of the latest updates:
Income Tax Changes:
- Georgia: The state had previously adopted a flat individual income tax rate effective January 1, 2024. This rate was further reduced in the latest legislative session.
- Utah: Similar to Georgia, Utah has enacted retroactive individual and corporate income tax rate cuts.
- Colorado: Taxpayers will benefit from a lower individual income tax rate this year as part of a Taxpayer’s Bill of Rights (TABOR) refund.
- Kansas: The state adopted retroactive individual income tax changes effective January 1.
Sales and Economic Nexus Changes:
- Wyoming: Effective July 1, Wyoming will change its economic nexus threshold.
- Indiana: A similar change was made retroactively effective January 1.
- Florida: A sales tax holiday will begin on July 1.
- Tennessee: Lawmakers have reformed the state’s sourcing rules.
Property Tax Adjustments:
- Maine: Taxpayers will see property tax changes taking effect in July.
- Alabama: A change will take effect after July but before January 2025.
- Colorado: Legislators passed a property tax relief package during the past session. However, it is contingent upon voters rejecting two property tax initiatives slated for the November ballot, so further details are pending.
Excise Tax Changes:
- Maryland, Maine, and Colorado: Residents will see increases in excise taxes on alcohol products.
- Minnesota: An additional fee will be levied on some retail deliveries.
- New Jersey: There will be an increase in the gas tax.
- New Hampshire: The threshold for the state timber tax has been increased.
These changes reflect significant legislative efforts to adjust state tax codes and provide relief or adjustments to taxpayers.
There are also routine or less notable tax changes taking effect in many states, including annual adjustments to income tax brackets, standard deductions, and personal exemptions; automatic formula-based changes to unemployment insurance taxes; changes in interest rates on taxes owed; administrative changes; and modifications to tax credits and other narrow-based tax provisions.
Stay informed and consult with our tax professionals to understand how these changes might affect you.
What Are the Notable State Tax Changes Taking Effect on July 1, 2024?
a. California Tax Changes Effective July 1, 2024
Starting July 1, 2024, California will introduce a new state excise tax of 11 per cent on the retail sale of firearms, ammunition, or precursor parts. This tax will be in addition to the existing federal excise tax. The revenue generated from this new tax will fund various public health and safety programs within the state.
b. Colorado Tax Changes Effective July 1, 2024
Colorado will implement changes from Proposition EE, affecting the taxes on tobacco and nicotine products. Here’s what you need to know:
- Cigarette Tax Increase: The tax on regular cigarettes will rise from $0.065 to $0.08 per cigarette. This means the tax on a pack of 20 cigarettes will go from $1.94 to $2.24. For modified-risk tobacco products, the tax will increase from $0.0325 to $0.04 per cigarette. Additionally, the minimum price, including taxes, for a pack of cigarettes will go up from $7 to $7.50.
- Tobacco Products Tax Increase: The tax on all tobacco products, excluding modified-risk tobacco products, will increase from 30 per cent to 36 per cent of the manufacturer’s list price. For modified risk products, the tax will rise from 15 per cent to 18 per cent.
- Moist Snuff Tax Increase: The minimum tax on moist snuff will increase from $1.48 to $1.84 per 1.2 ounces.
- Nicotine Products Tax Increase: The tax on nicotine products, which include e-cigarettes, vapes, nicotine pouches, and other modern oral products, will increase from 50 per cent to 56 per cent of the manufacturer’s list price. For modified risk products, the tax will rise from 25 per cent to 28 per cent.
These tax increases aim to provide $20 million to tobacco education programs, with the remaining funds supporting preschool programs in Colorado.
c. Maryland Tax Changes Effective July 1, 2024
Starting July 1, 2024, Maryland will see significant tax increases primarily affecting tobacco products. The tax on cigarettes will rise from $3.75 to $5.00 per pack, equating to $0.25 per cigarette for packs containing more than 20 cigarettes. Chewing tobacco and other similar products will experience a tax increase from 53% to 60%. Additionally, the tax on electronic smoking devices, excluding vaping liquid in containers of 5 millilitres or less, will increase from 12% to 20%.
d. Minnesota Tax Changes Effective July 1, 2024
Minnesota will introduce a new $0.50 retail delivery fee on transactions over $100 for deliveries within the state. Exceptions to this fee include drugs, medical supplies, and food. This fee will not apply to curbside deliveries, electronically delivered items, or deliveries from food and beverage service establishments. The fee will be listed separately on receipts as the “Road Improvement and Food Delivery Fee”.
e. Mississippi Tax Changes Effective July 1, 2024
In Mississippi, the bailment fee for manufacturers of spirits and wine stored in the state’s Alcohol Beverage Control warehouse will increase from $1.00 per case to $1.50 per case.
This fee aims to fund the state’s new public warehouse, with no specified end date for the fee once the warehouse is paid for.
f. New Hampshire Changes Effective July 1, 2024
Starting July 1, 2024, New Hampshire is making a significant adjustment to its timber tax policy. With Senate Bill 514 now in effect, the amount of wood and wood chips that are exempt from the state’s timber tax will increase by 50 per cent. This exemption applies to wood and wood chips that come from trees cut down for specific listed purposes.
This change is aimed at supporting the timber industry by reducing tax burdens on those who utilise wood resources for qualified activities.
g. New Jersey Changes Effective July 1, 2024
In New Jersey, residents will see a rise in the gas tax starting on July 1, 2024. The tax will go up by approximately $0.02 per gallon and will continue to increase by the same amount each year for the next five years, totalling an additional $0.10 per gallon by 2029.
Additionally, New Jersey will introduce a new annual registration fee for zero-emission vehicles. Initially set at $250, this fee will increase by $10 each year until it reaches $290 in 2028. These changes aim to generate revenue for infrastructure and environmental initiatives.
h. Oregon Change Effective July 1, 2024
Oregon is updating its tax on moist snuff, a type of smokeless tobacco. Effective July 1, 2024, the tax will increase from $1.80 per ounce to $1.86 per ounce. Furthermore, the minimum tax on retail containers of moist snuff will rise from $2.17 to $2.24 per container.
This adjustment is part of ongoing efforts to discourage tobacco use and increase state revenue from tobacco products.
i. Tennessee Tax Changes Effective July 1, 2024
Tennessee is aligning more closely with the Streamlined Sales Tax and Use Agreement as of July 1, 2024, following the passage of House Bill 323 in 2023. The state will adopt destination sourcing for interstate sales of services performed on tangible personal property and computer software. This means that the tax will be based on the location where the service is received rather than where it is performed.
Additionally, leased property, including licensed software or digital products, will follow the same principle. If such property is relocated out of Tennessee during the lease period, recurring payments will no longer be taxed in Tennessee. This change does not affect the sale of other specified property.
j. Utah Tax Changes
Starting July 1, 2024, Utah is implementing increases in the markup rates for various alcoholic beverages. The markup for spirits, wine, and malt liquor will rise from 88 per cent to 88.5 per cent, while the markup for heavy beer will increase from 66.5 per cent to 67 per cent.
Utah operates as a control state, meaning it has a monopoly over the sale and distribution of alcoholic beverages, allowing it to adjust markups instead of traditional excise taxes. Additionally, the beer tax will incrementally increase from $13.10 per barrel to $13.35 per barrel, with a future increase to $14.10 per barrel by 2027.
k. Virginia Tax Changes
In Virginia, several tax changes will take effect on July 1, 2024. The minimum threshold for gross annual revenue of a nonprofit entity required to provide a financial audit for a Retail Sales and Use Tax exemption will increase from $1 million to $1.5 million.
The state will also raise the tax on liquid nicotine products from $0.066 per millilitre to $0.11 per millilitre. Additionally, a new tax on liquid nicotine in open systems will be enacted at 10 per cent of the wholesale price.
l. Wyoming Tax Changes
Wyoming is updating its economic nexus rules by eliminating the 200-transaction threshold, leaving only the sales threshold of $100,000. This change aims to simplify the tax collection process for remote sellers operating in the state.
Bottom Line
Staying informed about state tax changes is crucial for both individuals and businesses to ensure compliance and optimise financial planning. The updates taking effect on July 1, 2024, reflect significant legislative efforts across various states to adjust tax codes, provide relief, and generate revenue for public programs. These changes span income, sales, property, and excise taxes, each with unique implications. Consulting with tax professionals can help navigate these changes effectively and take advantage of any potential benefits or mitigations.
Frequently Asked Questions
Ques. 1. What are the new state tax changes effective July 1, 2024?
Ans. 1. On July 1, 2024, several states will introduce significant tax changes. For instance, California will implement an 11% excise tax on firearms and ammunition, while Colorado will increase taxes on tobacco and nicotine products as part of Proposition EE. Additionally, states like Maine and Wyoming will see property tax adjustments and changes to economic nexus thresholds, respectively.
Ques. 2. How will property taxes change in 2024?
Ans. 2. States like Maine, Texas, and Colorado are seeing notable property tax adjustments. Maine will introduce changes affecting homeowners, Texas has raised its homestead exemption from $40,000 to $100,000, and Colorado has modified its property tax assessment rates.
Ques. 3. What are the income tax rate changes in various states for 2024?
Ans. 3. Georgia and Utah have retroactive individual and corporate income tax rate cuts effective from January 1, 2024. Kansas and Colorado are also lowering their individual income tax rates, with Colorado implementing changes under the Taxpayer’s Bill of Rights (TABOR) refund.
Ques. 4. What states have new sales tax changes starting July 1, 2024?
Ans. 4. Wyoming is updating its economic nexus threshold, and Indiana has retroactively applied similar changes effective January 1. Florida will have a sales tax holiday starting July 1, and Tennessee is reforming its state’s sourcing rules.
Ques. 5. Which states are increasing excise taxes in 2024?
Ans. 5. Maryland, Maine, and Colorado will see increases in excise taxes on alcohol products. Minnesota will introduce an additional fee on some retail deliveries, and New Jersey will raise the gas tax.
Ques. 6. What are the notable retroactive tax changes effective January 1, 2024?
Ans. 6. Seven states, including Colorado, Georgia, and Kansas, have enacted changes retroactive to January 1. These changes include individual income tax rate cuts and other tax relief measures.
Ques. 7. How will economic nexus rules change in 2024?
Ans. 7. Wyoming is eliminating the 200-transaction threshold, simplifying the process for remote sellers. Tennessee will also align more closely with the Streamlined Sales Tax and Use Agreement by adopting destination sourcing for interstate sales of services performed on tangible personal property and computer software.
Ques. 8. What are the updates to child and dependent tax credits in 2024?
Ans. 8. Several states are increasing their child and dependent tax credits. Colorado will expand its child tax credit to up to $1,200 per child, and Utah will implement a $1,000 credit for children under age four. Massachusetts will raise its child tax credit to $440 per dependent.
Ques. 9. What new excise taxes are being introduced in 2024?
Ans. 9. California is introducing an excise tax on firearms and ammunition, while Colorado is increasing taxes on tobacco and nicotine products. Maryland will levy an excise tax on the retail sale of cannabis at a rate of 9%.
Ques. 10. How will state tax changes impact businesses in 2024?
Ans. 10. Businesses will see various impacts depending on the state. For example, Tennessee’s alignment with the Streamlined Sales Tax and Use Agreement will affect how services and leased property are taxed. Additionally, the elimination of economic nexus thresholds in Wyoming will simplify compliance for remote sellers.
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