New: A duo of new studies show that a majority of states have cut top tax rates for the rich and corporations since 2000, and it could mean residents are worse off.
28 January 2026
Contact: jonathan@staterevenuealliance.org, 571-379-0534
A first-of-its-kind look at state tax history shows states have cut taxes for the wealthiest residents and corporations nearly 300 times this century, making potential Federal cuts harder to weather.
Also new: A broad comparison of popular national rankings reveals that states with the most progressive tax codes outperform those favored by anti-tax organizations, the Tax Foundation and American Legislative Exchange Council (ALEC)- Laffer on quality-of-life and other measures.
(Alexandria, VA) As states begin their 2026 legislative sessions, legislators are grappling with massive federal budget cuts to fund tax cuts in the ironically named One Big Beautiful Bill Act (H.R. 1). These cuts, in addition to potential revenue shortfalls, could trigger major healthcare, hunger, and education crises in states.
Based on a new comprehensive database of state tax rates from the Institute on Taxation and Economic Policy (ITEP), the State Revenue Alliance (SRA) has released an analysis of historical state tax data, which shows that in a majority of states, the wealthiest households and/or corporations are paying lower personal and corporate tax rates today than they were 26 years ago. At the same time, sales taxes have also increased in 11 states.
The numbers show a state policy environment increasingly tilted to the rich. Since 2000, states have cut the top income and corporate tax rates nearly 300 times. This loss of revenue has caused state budgets to come up short in too many states across the country: for example, in Nebraska and Idaho, where, according to ITEP, revenue shortfalls “were created largely by income tax cuts for high-income households,” favoring the wealthy over everyone else.
States often serve as laboratories for national policies–especially tax policy. While there are still states that are replicating a failed experiment that cut income tax rates and increased general sales taxes (see: Kansas in the mid-2010s), there is a growing list of states turning the tide to produce better and more equitable tax codes that improve the quality of life for their residents. States have collectively raised top personal and corporate tax rates 65 times since 2000.
In 2026, many states are debating legislation to raise revenue by taxing wealth and high incomes, raising corporate profit taxes, and other progressive tax policies.
A new study from the State Revenue Alliance finds that states with more progressive tax systems often rank higher on economic and quality-of-life measures. This novel approach to assessing the qualitative aspects of tax policy compares states using popular annual rankings, including U.S. News' Economic Opportunity, CNBC’s Quality of Life and Best for Business, WalletHub’s Overall Economy, Financial Distress, Raising a Family and Best States to Live In, Consumer Affairs States to Raise a Family, SimplifyLLC’s States for Entrepreneurs, The Commonwealth Fund’s Health Systems and the Annie E. Casey Foundation’s KIDS COUNT.
The examination finds that states ranked favorably by anti-tax activists do much worse, more often, on quality of life rankings, and barely do better on business-friendly rankings than the 10 states with the most progressive state tax systems.
“While individual rankings and indices cannot give the full picture of life in a state, SRA’s findings reveal a too-common trend about taxes in America: state policy has disproportionately benefited the wealthy and well-connected,” said Amber Wallin, Executive Director of the State Revenue Alliance. “The information also points to how everyone benefits when schools are well-funded, and when economic security and health are top priorities – even if that means raising revenue through taxes on the richest residents and most profitable corporations. It’s established that people don’t move based on state tax rates, and many of these business lobby listicles promoting the idea are also suspect. Our study simply points out that the proof is in the pudding – states that invest in their future are putting their residents' well-being at the top of many lists.”
Topline Findings from ITEP’s state tax history Database
The Institute on Taxation and Economic Policy (ITEP) database of state top tax rates is compiled from various national and state sources. For most of the 20th century, states taxed wealthier residents at higher rates than goods and services. But since the mid-90s, the median state sales tax rate has been higher than the median personal income tax rate. From 2000 to today,
A majority of states (28) have cut their top corporate income tax rate.
Twenty-five states have cut their top personal income tax rate.
Collectively, states have lowered the top personal income tax rate 172 times, compared to raising it only 44 times.
States have lowered the top corporate income tax rate 127 times and only raised them 21 times since 2000.
Regressive taxes, like general sales taxes, affect people with lower and middle incomes more, raising the cost of everyday items and exacerbating inequality.
States have raised their sales tax rates 48 times since 2000, while lowering them only 18 times.
When comparing today's tax rates to those in 2000, twelve states have lower top tax rates and have raised general sales taxes, which adversely affects people with low and moderate incomes: Arkansas, Idaho, Iowa, Indiana, Kansas, Louisiana, Nebraska, New Mexico, North Carolina, Ohio, Utah and Vermont.
Another 10 states cut both personal and corporate rates but left their sales tax rates unchanged. Those states were: Arizona, Colorado, Georgia, Kentucky, Mississippi, Missouri, North Dakota, Oregon, Rhode Island, and West Virginia.
Some states have made deep cuts to their tax base since 2000.
Ohio has been the most aggressive in moving toward a regressive tax code by slashing its personal tax rate by 62% and repealing its corporate tax, while increasing the state sales tax by 15%.
Most of these 12 states have tumbled down the Institute for Taxation and Economic Policy’s Inequality Index, which measures the overall regressivity of state tax codes.
In 1996, North Carolina’s tax code was the 8th most progressive in the nation; Ohio was 11th. In the 2024 version of ITEP’s Inequality Index, North Carolina had fallen to the 24th most regressive tax code, Ohio is now the 15th most inequitable.
Kansas was the 17th most progressive tax code in 1996 and is now 24th.
Vermont stands apart from the other 11 states. While it has seen small reductions in its top marginal income and corporate tax rates, and raised its sales tax from 5 to 6%, these regressive changes have not affected its overall ranking as the second most progressive tax system in the country.
Topline Findings from state rankings analysis:
The study compares states that lead the nation on three widely cited state tax rankings: the 2026 Tax Foundation’s State Tax Competitiveness Index, the 2025 ALEC-Laffer State Economic Competitiveness Index, and the Institute on Taxation and Economic Policy’s Tax Inequality Index (“Who Pays, 7th Edition, 2024). It also includes the states with the highest personal income tax rate, those states without an income tax and the five states that have cut taxes for millionaires the most.
The findings indicate that states with the most progressive tax codes are ranked significantly better places to live, work, and raise a family.
ITEP’s Index of the most progressive states or states with the highest personal income tax rates ranked better than the Tax Foundation Index, ALEC-Laffer Index, or states with no income tax in 9 of the 11 different categories.
Overall, the most progressive tax codes, ranked in ITEP’s Inequality Index, collectively rank in the top half of all states on 10 of 11 ranking scales.
As a cohort, the Tax Foundation’s top 10 average in the bottom half in 6 rankings, the ALEC-Laffer index averages appear in the bottom half of states in 8 of the 11 rankings.
States that are highlighted as ITEP’s top ten progressive list appeared collectively in the top 10 of the nation 41 times across all 11 rankings, compared to 20 times among the Tax Foundation’s top-ranked, and 17 times for the highest-ranked on the ALEC/Laffer index.
States that are at the top of the ALEC-Laffer rating appear 23 times among the 10 worst across the 11 rankings. The best tax codes according to the ITEP rankings appear 10 times in the bottom of the collective rankings. Those that score highest on the Tax Foundation’s ranking are rated among the worst 10 a total of 17 times.
In the two categories that the Tax Foundation and ALEC’s top states rated better, CNBC’s top-rated for business and SimplifyLLC’s best states for entrepreneurs, the states with the most progressive tax systems scored well, too. Minnesota was ranked 10th in CNBC’s business ranking, and three states (Maine, Oregon, and Vermont) were in the top 10 on SimplifyLLC's ranking of the best places for entrepreneurs, more than either of the business-oriented indexes.
States with the top income tax rates lead states with no income taxes in 9 of the 11 measures, including the overall economy.
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TheState Revenue Alliance and its c4 affiliate, the Alliance Action Fund, provide a network of state-based community, labor, and policy advocates from across the country with the strategic resources they need to build intersectional, people-powered campaigns that transform revenue policy – ensuring states fully fund communities and that corporations and the ultra-rich pay what they owe.