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Arkansas
Individual Tax Rates and Brackets – Beginning 1/1/2024, the state’s top individual income tax rate is reduced from 4.7% to 4.4%, and the state’s top corporate income tax rate is reduced from 5.1% to 4.8%. Tax brackets have also been adjusted accordingly.
Tax Credit – Retroactive to tax years beginning 1/1/2023, a resident individual taxpayer who files an Arkansas full-year resident income tax return, other than a joint return, having net income up to $103,600 is allowed a nonrefundable income tax credit against the individual income tax. The credit amount is based on net income with the highest amount, $150, allocated to those with income of $1 to $89,600. Spouses filing separately on the same return may each claim one credit against the tax on the return of each spouse.
Resident individual taxpayers who file a joint Arkansas full-year resident income tax return having net income up to $207,200 are allowed a nonrefundable income tax credit against the individual income tax. The highest credit amount, $300, is allocated to those with net income of $1 to $179,200. Spouses filing jointly on the same income tax return will receive only one credit against their aggregate tax.
The income tax credits must not be claimed by a taxpayer for any tax year other than the tax year beginning on January 1, 2023, or who files a nonresident return or a part-year resident return. The amount of the income tax credit that may be claimed by a taxpayer in a tax year must not exceed the amount of income tax due by the taxpayer.
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Colorado
TABOR Refunds – Based on preliminary guidance from the Colorado Department of Revenue, certain recipients of personal income tax refunds under the Taxpayer’s Bill of Rights (TABOR) may not have to report those refunds as income for federal income tax purposes. There are two categories of such recipients:
- Taxpayers who use the standard deduction when filing federal income tax returns
- Taxpayers who itemize their deduction and do not deduct state and local general sales taxes.
That leaves taxpayers who itemize their deductions and also elect to deduct state the local general sales taxes, who will likely be required to report their TABOR refunds as income. CDOR is still analyzing federal guidance on this issue and plans to provide informational materials in the future.
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Iowa
The state’s corporate tax rates for 2024 have been lowered based on the state’s law mandating such a reduction if net corporate income tax receipts for the preceding year exceed $700 million. The 2024 corporate tax rate brackets are as follows:
- Income of $0 to $25,000 – 5.5%
- Income of $25,001 to $100,000 – 5.5%
- Income of $100,001 to $250,000 – 7.1%
- Income above $250,000 – 7.1%
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Kentucky
The Kentucky standard deduction for 2024 will be $3,160, which reflects a $180 increase. The state’s personal income tax for 2024 will be 4%, down from 4.5% in 2023.
Nebraska
Nebraska joins many other states which allow pass through entities such as partnerships or S corporations to be taxed at the entity level. This election may be made for tax years beginning on and after January 1, 2018. Click here to visit the Nebraska Department of Revenue’s website for applicable forms and information.
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North Carolina
The state’s 2023 Appropriations Act, which became law in mid-September, includes a number of state tax provisions:
Personal Income Tax Rate Reduction – For tax years beginning on or after January 1, 2024, the personal income tax rate will be gradually lowered over three years, with further reductions possible between 2027 and 2034 if total general fund revenue meets specified trigger amounts:
- For 2024, the rate will be 4.5%
- For 2025, the rate will be 4.25%
- For 2026 and thereafter, the rate will be 3.99%
Franchise Tax Cap – For tax years beginning on or after January 1, 2025, and applicable to the calculation of franchise tax reported on the 2024 and later corporate income tax returns, the franchise tax has been capped at $500 on the first $1 million of a C corporation’s tax base. A corporation will continue to pay $1.50 per $1,000 of its tax base that exceeds $1 million.
Taxed Partnerships – Beginning January 1, 2022, certain trusts and corporations can elect to be taxed at the entity level. These include a trust that does not have a beneficiary other than an individual, an estate, a trust, or an organization described in IRC §1361(c)(6); and an entity classified as a corporation for federal income tax purposes. For the 2022 taxable year, a partnership that could not make the election on its timely filed tax return may make the election by filing an amended return on or before October 15, 2023.
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Oklahoma
Bonus Depreciation – For tax years beginning on or after January 1, 2023, the full cost of qualified property and qualified improvement property can be expensed in the tax year in which the cost is incurred, or the property is placed in service. In order to utilize this option, taxpayers must add back in state taxable income that was depreciated for federal income tax purposes in the year in which the depreciation is claimed. The election is generally irrevocable for the applicable property unless specifically authorized by the Tax Commission.
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Virginia
Business Interest Deduction Increase – Beginning 1/1/2024, corporate and individual taxpayers can deduct 50% of business interest disallowed as a deduction under IRC §163(j). For taxable years beginning on and after 1/1/2022, taxpayers can deduct 30% of such disallowed interest.
Standard Deduction Amounts Increased – Between 1/1/2022 but before 1/1/2024, the standard deduction is $8,000 for single individuals and $16,000 for married persons (1/2 of that amount for married individuals filing a separate return). For taxable years beginning on and after 1/1/2024 but before 1/1/2026, the standard deduction is $8,500 for single individuals and $17,000 for married persons (1/2 of such amounts for married filing separately).
For the 2023 tax year, the standard deduction increase is contingent on the Tax Department certifying annual revenue growth of at least 5% for the 12-month period between July 2022 and June 2023. If the 5% growth rate is not met for that 12-month period, the standard deduction for taxable year 2023 will be $7,500 for single individuals and $15,000 for married persons.
State Tax Holiday Reinstatement – Virginia’s sales tax holiday provisions applicable to Energy Star or Watersense qualified products, school supplies, clothing and footwear, and certain hurricane preparedness equipment will be in effect through July 1, 2025. The sales tax holiday for calendar year 2023 will apply only to those sales occurring during the 3-day period that begins Friday, October 20, and ends at 11:59 pm on the following Sunday.
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