State Tax Changes Taking Effect January 1, 2025

By Joseph Johns, Abir Mandal, Jared Walczak, Jacob Macumber-Rosin for Tax Foundation

Thirty-nine states began 2025 with notable tax changes, including nine states cutting individual income taxes (two of them implementing flat taxes), three states cutting corporate income taxes, and two states adopting new first-year expensing provisions. Generally, state tax changes take effect either at the start of the calendar year (January 1) or the fiscal year (July 1 for most states), with rate changes for major taxes typically implemented effective January 1—either prospectively, as in these cases, or retroactively, as may happen under legislation enacted in the new year.

Recent years have seen a wave of significant tax reforms, and the changes scheduled for 2025 show that these efforts have not let up. The evidence of the past four years indicates that many states understand and value the importance of creating and maintaining a stable, pro-growth, and competitive tax code.

For Summary of State Tax Changes and Tax Changes by State click here.