With a week to go before Election Day, taxes are top of mind for many voters. While federal tax questions have dominated the headlines this election cycle, state and local taxes can have a big impact on both individuals and businesses. Here’s a look at some of the most significant state tax matters on the ballot—as well as one that fell off (I’m looking at you, California).
Arizona
A measure in Arizona—Proposition 312—would allow property owners to apply for a property tax refund if they feel that the local government has not done enough to enforce vagrancy and nuisance laws against homeless residents. Specifically, the proposal would allow for a refund application if the city or locality in which the property is located does not enforce laws regarding illegal camping, loitering, obstructing public thoroughfares, panhandling, public urination or defecation, public consumption of alcoholic beverages, and possession or use of illegal substances. Under the proposal, a property owner could apply for this refund once every tax year.
California
Earlier this year, the California Supreme Court rejected a ballot measure that would make it more difficult to raise taxes in California. The initiative, known as the Taxpayer Protection and Government Accountability Act—or TPA—would have required voter approval to raise taxes or fees or to create new taxes. The California Business Roundtable sponsored the measure, and the proposal received enough signatures to qualify for the November 2024 ballot.
However, Governor Gavin Newsom and the California legislature challenged the measure in court, arguing that the proposal wasn’t merely an amendment but a virtual rewrite of the state’s constitution (that would require a supermajority vote of the legislature or a constitutional convention). The California State Supreme Court agreed, removing the TPA from the November ballot.
Colorado
Colorado voters will consider Proposition JJ, which would direct all sports betting tax revenue above voter-approved limits to water conservation and protection projects. Sports betting revenues are up in many states, raising questions of how to best spend the money.
Colorado voters will also consider Proposition KK, which would create a 6.5% excise tax on firearms, firearm parts, and ammunition. The tax would be paid by firearm dealers, manufacturers, and ammunition sellers and would be in addition to the existing sales tax. Revenues would be directed to crime and victim services, mental health services for veterans and youth, and school safety programs.
Florida
Florida voters are set to consider Amendment 5. Under current law, homes in Florida are assessed at just value (generally, fair market value, which is the amount the property would sell for on the open market) minus the homestead exemption. The exemption can be up to $50,000—the first $25,000 applies to all property taxes, including school district taxes, while an additional exemption applies to the assessed value between $50,000 and $75,000 (and only to non-school taxes).
The amendment would provide for an annual inflation adjustment for the piece of the exemption that applies to non-school taxes (that second amount, which goes up to $25,000). The adjustment would be made every year.
Georgia
Georgia voters will tackle three tax-related measures. The first two would require amending the state’s constitution (which is why they are referred to as Amendment 1 and Amendment 2). The third is a statewide referendum.
Amendment 1 would authorize the state legislature to impose a statewide local homestead exemption from ad valorem taxes (ad valorem taxes are based on an assessed value, like real estate taxes). The exemption would be tied to inflation, and local governments would have to opt out if they didn’t want to participate.
Amendment 2 would create a Georgia Tax Court to hear tax-related cases. Currently, Georgia has a Tax Tribunal, which is an administrative court that handles individual and corporate tax disputes with the Georgia Department of Revenue. As an administrative court, it’s part of the state’s executive branch. Creating a tax court would move these matters to the state’s judiciary branch.
Referendum A would increase the maximum value of tangible personal property that could be exempt from taxes. The exemption is currently $7,500, and the proposal would boost it to $20,000. Personal property in Georgia is subject to tax if it meets certain criteria—that primarily applies to farm, manufacturing, and office equipment. Georgia last raised the personal property tax exemption in 2002.
Illinois
In Illinois, voters will consider a proposal to create a 3% surtax on income over $1 million. The so-called millionaire’s tax would tie the revenue to reducing property taxes. It’s slated as a non-binding advisory question, largely to take the temperature of the public (it was part of Senate Bill 2412, instructing state election officials to add it to the ballot).
Louisiana
Louisiana voters will consider Amendment 4, the Louisiana Property Tax Sales Administration Amendment. The amendment does a few things. First, it would remove constitutional provisions related to property tax sales and authorize the legislature to provide for tax sales, including tax lien sales. Second, it would provide that tax payments can only be postponed by emergencies declared by the governor under the Louisiana Homeland Security and Emergency Assistance and Disaster Act, allowing the legislature to give tax collectors the authority to waive penalties for cause.
Nevada
Question 5 is straightforward for Nevada voters: whether to exempt diapers from the state sales tax (adult and child diapers are included). Currently, 19 states plus D.C. exempt diapers from taxation. The state sales tax rate in Nevada is 6.85%, but local jurisdictions can add additional taxes.
North Dakota
North Dakota voters will decide on Initiative Measure 4, which would amend the state’s constitution to prohibit political subdivisions from levying any tax on the assessed value of real or personal property, except for the payment of bonded indebtedness—in other words, it would eliminate property taxes based on assessments. Since property taxes generally support local coffers, the state government would be required to replace property tax revenue to local governments every year by an amount no less than the property taxes those entities levy for the 2024 tax year.
Oregon
Oregon voters will decide on Measure 118, the Corporate Tax Revenue Rebate for Residents Initiative. Currently, corporations in Oregon pay either the corporate income tax or the minimum tax, whichever is higher. Measure 118 would increase the minimum tax on corporations with Oregon sales to 3% (in addition to the minimum tax already in place). The additional revenue from the corporate sales tax would be distributed to eligible residents—defined as a person who resides in the state for 200 days of the year regardless of age—as a tax rebate each year.
South Dakota
South Dakota voters will consider Initiated Measure 28, which would eliminate the state sales tax on items sold for human consumption. Currently, the state collects a 4.2% tax on the sale or use of certain goods, including foods and drinks (some municipalities also collect these taxes). Human consumption is not defined by state law, but the common definition generally applies to groceries.
Washington
Washington voters will consider Initiative 2109, the Repeal Capital Gains Tax Initiative. The measure would repeal the state’s 7% tax on capital gains, which went into effect in 2022. Under the recent law, capital gains excise tax is imposed on individuals with long-term capital gains over $250,000.
Washington voters will also consider another repeal in the form of Initiative 2117. Initiative 2117 would repeal sections of a state law targeting greenhouse gas emissions, known as the Climate Commitment Act. The 2021 law established a cap and invest program designed to reduce greenhouse gas emissions (businesses with emissions exceeding 25,000 metric tons of carbon dioxide per year must purchase allowances equal to their allowed greenhouse gas emissions)—the cap and invest program would be barred, as would carbon tax credit trading. The measure would also decrease funding for investments in transportation, clean air, renewable energy, conservation, and emissions reduction.
Wyoming
Wyoming has introduced an amendment to create a new class designation for residential property. Under current law, property is uniformly assessed at full value for all property classes, including commercial and residential. A new designation for owner-occupied properties would allow the legislature to tax those properties at a different rate.
Hot Topics in State Tax Law
A few tax measures are on ballots in several states. For example, voters in at least four states (Nebraska, North Dakota, South Dakota, and Florida) will be asked about the legalization of marijuana, which would, among other things, raise revenue.
Voters in several other states will take another look at veteran property tax exemptions. Specifically, Colorado will consider Amendment G, which would expand veterans’ eligibility for property tax exemption—currently, the homestead exemption is available only to veterans with a complete and total disability. New Mexico also has a measure on the ballot that would expand property tax exemptions for veterans based on the degree of their disability. And finally, Virginia has a proposal on the ballot that would change the Virginia constitution to allow exemptions for surviving spouses of certain veterans.
Bottom Line
As voters head to the polls, it’s clear that many states have taxes on the ballot. Keep in mind that these are just summaries—for specifics and other details, be sure to read through the proposal language on your specific ballot. The outcomes of these measures will impact state budgets—and your wallet—in years to come.
Read the full article here
