2017 is finally upon us. There are a lot of changes that we should expect to happen to taxes over the course of the next few years. But as of the first, many states have already begun changing their tax codes. Corporate income taxes are one of the areas in which we will be seeing multiyear reductions and reforms. We will look at the five states (four states and capital) that reduced or will reduce their corporate tax rates in 2017: Arizona, The District of Columbia, Indiana, New Mexico, and North Carolina.
Arizona’s multiyear phase of decreasing the corporate tax rate began in 2015 when it stood at 6.5%. Since then, it has dropped to 5.5% and this year finally dropped to 4.9% where it will stay for the time being.
In addition to corporate tax rates being dropped, Arizona has attempted for wide sales tax reform.
District of Columbia
The Federal Capital reduced the corporate tax rate this year from 9.2% to 9%. This is part of a larger plan that attempts to gradually reduce the tax rate annually to 8.25% in 2019. This is part of a giant tax reform that also aims to reduce income tax and introduce a new income tax bracket.
For Indiana, the corporate tax rates will drop from 6.25% to 6%, but not immediately. The new changes will take place on the first of July. Since 2011, Indiana has reduced the corporate tax rate steadily from 8.5%. The end goal for the state is to get to 4.9% in 2021.
In other tax news, Indiana has been issuing widespread reforms over the past years which include individual income taxes, estate taxes, and personal property taxes.
New Mexico reduced their corporate tax rate from 6.6% to 6.2% this year in an effort that started in 2013, when it was 7.6%. The end goal for New Mexico is to reduce the tax rate to 5.9% next year. This reduction is part of an entire plan, which could be seen as controversial as it deals with a lot of factors, such as removing some corporate tax credits and capping film production tax credit.
North Carolina reduced their corporate tax rate from 4% to 3%. This gfradual reduction of this tax rate started in 2013 when it was the highest corporate tax rate of the south at 6.9%. The drops of the rate of the last 2 years were contingent on revenue.
Individual income rate has also reduced to 5.49% which is greatly reduced from 7.75% over the past years.
These 5 are just part of the 15 states that have reduced their corporate income tax rates since 2008, which seems to be part of a growing trend in state tax policy.