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State tax policy: potential impacts of the 2024 election

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While most attention has been focused on the federal elections, significant state elections and ballot measures also will be decided.


Ernst & Young LLP contributors to this article include David Sawyer, Senior Manager and Rebecca Bertothy, Associate Director.

The outcomes of federal and state elections in the United States are likely to significantly impact state fiscal conditions and tax policy decisions in the coming years. While most attention has been focused on the federal elections — with 34 Senate seats, all House seats and the presidency up for election — significant state elections and ballot measures also will be decided.


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Eleven gubernatorial races will be decided, with at least eight states poised to welcome a new governor due to term limits or an incumbent’s decision not to seek re-election. Legislative elections will be held in 44 out of 50 states, deciding approximately 5,800 legislators (79%) in 85 of the nation’s 99 state legislative chambers.

 

While several important state tax-related measures are on the ballot this election cycle, a few stand out as especially significant. If approved, Oregon Measure 118 would impose a new 3% minimum tax on corporations’ Oregon gross sales exceeding $25 million, beginning in 2025. San Francisco Measure M, if approved, would substantially revise the city’s business taxes beginning next year, including rate changes and how several of the taxes are calculated. Other measures would implicate future tax policy decision-making.

 

Further, with large portions of the Tax Cuts and Jobs Act set to sunset in 2025, the results of the 2024 federal elections will determine the path forward for federal tax policy. However, state elections and the ensuing legislative sessions, in which all states will have to pass a budget, will ultimately shape how states align with or diverge from federal tax policy moving forward.

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Summary 

The results of the US elections, alongside the expiration of parts of the Tax Cuts and Jobs Act in 2025, will influence both federal and state tax policies.

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