No one likes paying more taxes. However, tight budgets have led many states to consider revenue-raising measures aimed at taxpayers. Below, we'll go through some of the ways that taxpayers in these states will find themselves paying a bit more this year.
California, Maine pass income tax rate increases for high-income taxpayers
Two states passed increases to their scheduled income tax rates for 2017. In California, temporary tax hikes had been scheduled to end this year, but voters approved an extension of those taxes through 2030. That means the top tax bracket of 13.3% for California taxpayers will stay in place for the next decade and beyond, rather than falling back down to 10.3%. The top rate applies to those who earn $1 million or more.
In Maine, meanwhile, voters passed by the narrowest of margins an increase on those with individual income above $200,000. The boost sends top tax rates from 7.15% to 10.15%, with the extra 3 percentage points providing direct support to public education for kids in kindergarten through 12th grade.
Taxes at the pump are going up in seven states
Gasoline taxes have been at the forefront of attention in many states, because low gasoline prices make it easier for motorists to stomach higher levies. Moreover, with the ailing state of transportation infrastructure in many areas, a gas tax increase makes political sense as well. Last November, New Jersey more than doubled its gasoline tax, and many states had already looked to join the Garden State once 2016 came to an end.
Drivers in Florida, Georgia, Indiana, Michigan, Nebraska, North Carolina, and Pennsylvania are seeing increases in gasoline taxes in 2017. The most significant increase will happen in Pennsylvania, where Keystone State motorists will pay $0.079 per gallon more than they did last year. That will push the total gas tax to $0.504 per gallon, which is by far the highest in the nation. Michigan drivers will also see a big increase. A $0.073 per gallon increase will take total taxes to $0.3054 per gallon, making the boost almost a third above its previous rate.
Most tax advocates expect other states to follow suit late in 2017. According to experts following state tax issues, more than a dozen states could take a closer look at raising their gasoline taxes at some point during the coming year.
Sales taxes generally stable at the state level
For the most part, major state sales tax increases aren't currently scheduled for 2017. The most recent statewide sales tax boosts came in the middle of 2016. Louisiana increased its sales tax from 4% to 5% effective April 2016, while South Dakota taxpayers saw a half-percent increase from 4% to 4.5% starting in June 2016.
However, note that taxpayers in many locations might pay higher sales taxes because of the way states interact with local county and municipal governments. For instance, even though the state of California recently recognized a sales tax decrease for 2017, residents of San Jose and the surrounding Santa Clara County will see sales taxes rise by half a percent in April 2017. Other taxing jurisdictions, including special-use districts, can often create net sales tax increases in particular locations even when the broader state-imposed general sales tax remains constant.
Taxpayers have generally gotten used to the idea that taxes go up far more often than they go down, and for residents of these states, rising taxes will be a fact of life in 2017. Even if your state isn't on the list currently, you'll want to watch your state legislatures closely to make sure that they don't join the growing crowd of government entities boosting the amount they collect from their taxpayers in the months ahead.