2024 State Tax Law Changes

2024 State Tax Law Changes

Here is a brief description of the tax provisions that go into effect in 2024 for States that had changes:

Alabama

• Overtime Wages Exemption: Starting in 2024, overtime wages paid to full-time workers will be exempt from Alabama income tax. These wages will be noted on the 2024 W-2 in Box 14 with the description “EX OT WAGES – $XXXXX.” Further guidance on how to report this on the Alabama income tax return will be provided.

For more details, see the Overtime Exemption FAQs on the Alabama Department of Revenue’s website

Arizona:

• IRC Conformity: Arizona tax law will conform to the Internal Revenue Code (IRC) as of January 1, 2024.

Arkansas:

• Corporate Tax Rate Reduction: The corporate tax rate will be lowered to 4.3%.
• Individual Tax Rate Reduction: The top individual tax rate will be reduced to 3.9%.

Colorado:

• Child Tax Credit (CTC): The Colorado CTC will be a percentage of the federal CTC based on the taxpayer’s federal AGI:
  • 70% for AGI up to $25,000 ($35,000 for Married Filing Jointly – MFJ)
  • 40% for AGI between $25,001 and $50,000 ($35,001 to $60,000 for MFJ)
  • 20% for AGI between $50,001 and $75,000 ($60,001 to $85,000 for MFJ)
• Earned Income Tax Credit (EITC): The Colorado EITC will be calculated as 50% of the federal EITC for the 2024 tax year.
• Tax Rate Reduction: Both individual and corporate tax rates will be reduced to 4.25%.
• Family Affordability Tax Credit: Beginning in 2024, a new refundable credit will be available for filers with eligible children under 17 years old:
  • $3,200 for each child under age 6
  • $2,400 for each child aged 6 to 16
  • The credit is phased out for taxpayers with an AGI exceeding $15,000 ($25,000 for MFJ).
• Senior Housing Credit: Taxpayers aged 65 or older as of the end of 2024 may be eligible for a credit of up to $800 if:
  • Their federal AGI is less than or equal to $75,000 ($125,000 for MFJ)
  • They did not claim the senior property tax exemption for 2024
  • The credit is reduced once the taxpayer’s AGI exceeds $25,000

Connecticut:

• Marginal Tax Rate Reduction: The bottom two marginal tax rates will be reduced as follows:
  • 2% for taxpayers with taxable income up to $10,000 ($20,000 for Married Filing Jointly – MFJ)
  • 4% for taxpayers with taxable income between $10,001 and $50,000 ($20,001 to $100,000 for MFJ)
• Retirement Income Exemption: The retirement income exemption is extended for taxpayers with AGI up to $100,000 ($150,000 for MFJ).

District of Columbia:

• Standard Deduction:
  • $29,200 for Married Filing Jointly
  • $21,900 for Head of Household
  • $14,600 for Single filers
• Additional Standard Deduction:
  • $1,550 for Married filers
  • $1,950 for Single or Head of Household filers
• Earned Income Tax Credit (EITC):
  Taxpayers with a DC EITC of at least $1,200 can choose to receive their EITC in monthly payments or opt to receive the entire amount in a lump sum.

Georgia:

• Flat Tax Rate: Georgia will adopt a flat tax of 5.39% for individuals.
• Increased Personal Exemption: The personal exemption will increase to $4,000 for each dependent of the taxpayer.
• Corporate Tax Rate: The corporate tax rate will be set at 5.39%.
• New Standard Deduction: The personal exemption will be replaced by a new standard deduction.
• Itemized vs. Standard Deduction: Taxpayers who itemize on their federal return can choose to either itemize or take the standard deduction on their Georgia return.
• Nonrefundable Credit for Itemizers: Georgia taxpayers who itemize can claim a $300 nonrefundable credit to offset the loss of the Georgia personal exemption.

Hawaii:

• Increased Standard Deduction:
  • $4,400 for Single/Married Filing Separately (MFS)
  • $6,424 for Head of Household
  • $8,800 for Married Filing Jointly (MFJ)/Surviving Spouse
• Pass-Through Entity Tax:
  Legislation enacted on June 1, 2023, introduced a new Pass-Through Entity (PTE) tax effective January 1, 2024, applicable to tax years beginning after December 31, 2022. Key details include:
  • Partnerships or S Corporations may elect to be taxed at a rate of 11% at the entity level. The election must be made annually.
  • For the 2023 tax year, the election must be made by April 20, 2024.
  • For tax years after December 31, 2023, the election must be made by April 20 of the taxable year.
  • Members of a Pass-Through Entity can claim a credit equal to their pro-rata share of the tax paid by the entity.

For more details, refer to Hawaii Tax Information Release No. 2023-01.

Idaho:

• Reduced Individual Tax Rate: The individual tax rate will be reduced to 5.695% for taxable income over $2,500 ($5,000 for Married Filing Jointly – MFJ).
• Reduced Corporate Tax Rate: The corporate tax rate will also be reduced to 5.695%.
• IRC Conformity: Idaho tax law will conform to the Internal Revenue Code (IRC) as of January 1, 2024.

Illinois:

• Increased Personal Exemption: The personal exemption will increase to $2,775.
• Illinois Child Tax Credit:
  A new credit is available for Illinois taxpayers with children under age 12 who qualify for the federal Earned Income Tax Credit (EITC). The credit amounts are:
  • Up to $300 per child for taxpayers with three or more children
  • $270 for two children
  • $170 for one child
    Income limits for the credit are as follows:
  • Married Filing Jointly (MFJ) with earnings up to $60,000
  • Single taxpayers with earnings up to $50,000

Indiana:

• Reduced Individual Income Tax Rate: The individual income tax rate will be reduced to 3.05%.

Iowa:

• Reduced Individual Income Tax Rate: The individual income tax rate will be reduced to 5.7%.
• Corporate Tax Rate Reduction: The corporate tax rate will be reduced to 5.5% for income up to $100,000 and 7.1% for income above $100,000.
• Surviving Spouse Pension Exclusion: A surviving spouse may exclude from income any amounts received from a deceased spouse’s pension if the deceased was employed in a protection occupation, or as a sheriff, deputy sheriff, firefighter, or police officer.
• New Tax Credit for Moving Expenses: A new tax credit is available for certain individuals who move to Iowa to accept a public safety officer position.

Kansas:

• Corporate Tax Rate Reduction: The corporate tax rate will be reduced to 3.5%.
• Corporate Surtax: A corporate surtax of 3% will apply when Kansas taxable income exceeds $50,000.
• Restructured Income Tax Brackets: A new two-bracket system will be implemented with the following rates:
  • 5.2% for taxable income up to $46,000
  • 5.58% for taxable income over $46,000
• Social Security Income Exemption: All Social Security income will be exempt from Kansas state taxes.
• Increased Personal Exemption and Standard Deduction:
  • Standard deduction: $3,605 ($8,240 for Married Filing Jointly – MFJ)
  • Personal exemption: $9,160 ($18,320 for MFJ) and $2,320 for each dependent
• Increased Child and Dependent Care Credit: The credit will now be 50% of the federal credit amount.
• Adoption Credit: Kansas will match 100% of the federal adoption credit.

For more details, see the 2024 Kansas Legislative Session summary.

Kentucky:

• Reduced Individual Income Tax Rate: The individual income tax rate will be reduced to 4.0%.

Louisiana:

• Increased Deduction for Elementary and Secondary School Tuition:
  The deduction limit will increase to $6,000 per dependent for qualified tuition, education expenses for homeschooled children, and certain educational expenses for a quality public education.
• New Oyster Shell Recycling Credit:
  A new tax credit will be available for restaurants participating in oyster shell recycling.
• Corporate Tax – Sales Factor:
  The rules for determining the sales factor will now include certain sales of intangible property in both the numerator and denominator of the sales factor.

Maine:

• Refundable Dependent Exemption Tax Credit: The dependent exemption tax credit is now refundable.
• Refundable Maine Dependent Exemption Credit: The Maine Dependent Exemption credit will also be refundable.
• Maine Pension Deduction: The Maine pension deduction will be calculated based on the maximum annual Social Security benefit.

Maryland:

• Increased Subtraction for Police Auxiliary or Reserve Volunteers: The subtraction for qualifying police auxiliary or reserve volunteers will increase to $7,000.

Massachusetts:

• Joint Filing Requirement: Married couples must file a joint Massachusetts state return if they file a joint federal return for the same year.
• Increased Child and Dependent Tax Credit: The child and dependent tax credit will increase to $440.
• Temporary Authorized Training Tax Credit for Emergency Assistance:
  Qualifying partnerships, limited liability corporations, or other legal entities that provide training to qualified trainees through an authorized training program can claim a credit of $2,500 for each qualified trainee.

Michigan:

• Increased Individual Income Tax Rate: The individual income tax rate will increase to 4.25%.
• Michigan Earned Income Tax Credit (EITC): The Michigan EITC will be 30% of the federal EITC.

Minnesota:

• Child Tax Credit: Taxpayers who qualify for the 2023 Child Tax Credit can opt to receive an advance payment of their 2025 Child Tax Credit.
• Corporate Net Operating Loss (NOL) Limitation: For tax years beginning after December 31, 2023, the NOL deduction will be limited to 70% of the corporation’s taxable income.
• Standard Deduction:
  • Married Filing Jointly (MFJ): $29,150
  • Head of Household: $21,900
  • Single/Married Filing Separately: $14,575
• Dependent Exemption: The dependent exemption will be $5,050.

Mississippi:

• Individual Income Tax Rate: The individual income tax rate will be 4.7%.

Missouri:

• Social Security Income Exemption: All Social Security income will be exempt from Missouri income tax.
• Top Individual Income Tax Rate: The top individual income tax rate will be 4.8%.

Montana:

• Reduced Income Tax Brackets: Montana will reduce the number of income tax brackets to two.
• Lowered Top Marginal Tax Rate: The top marginal tax rate will be reduced to 5.9%.
• Filing Status Requirement: Montana taxpayers must use the same filing status on both their federal and state returns.
• Capital Gains Tax Rates: Capital gains will be taxed at:
  • 3% for taxpayers with income up to $20,500 ($41,000 for Married Filing Jointly – MFJ)
  • 4.1% for taxpayers with income above these amounts.
• Reduced Top Individual Income Tax Rate: The top individual income tax rate will be lowered to 5.9%.
• Montana Earned Income Tax Credit (EITC): The Montana EITC will now be calculated as 10% of the federal credit.

Nebraska:

Corporate Tax Rate Reduction: The corporate tax rate will be reduced to 5.84% for income over $100,000.

• Reduced Individual Tax Rate: The individual income tax rate will be reduced to 5.84%.
• New Refundable Child Care Tax Credit:
  • $2,000 per eligible child for taxpayers with household income of $75,000 or less.
  • $1,000 per eligible child for taxpayers with household income between $75,001 and $150,000.
• New Nonrefundable Credit for Child Care Contributions:
  Individuals and businesses that contribute to a child care provider can claim:
  • 100% of the contribution if the child care facility is in a federal opportunity zone.
  • 75% of the contribution if the facility is not in an opportunity zone.

New Mexico:

• Increased Net Capital Gain Income Deduction: The deduction for net capital gains will increase beginning in 2024.
• Corporate Income Tax Rate: Starting in tax year 2024, the corporate income tax rate will be 5.9%, regardless of the corporation’s taxable income.
• Apportionment of Business Income: Beginning in 2024, business income will be apportioned using only the sales factor.
• Extended Armed Forces Retirement Pay Exemption: The exemption has been extended through 2031.
• Modified Tax Rates: New tax rates will take effect in tax year 2024.

Legislation Enacted in 2024:

• Clean Car Income Tax Credit:
  • $3,000 for a new electric vehicle.
  • $2,000 for a new plug-in hybrid electric vehicle or fuel cell vehicle.
  • $1,500 for a previously owned electric vehicle.
  • $1,000 for a previously owned plug-in hybrid electric vehicle or fuel cell vehicle.
• Clean Car Charging Unit Income Tax Credit:
  A credit for electric vehicle charging units will be available as follows:
  • Up to $400 for residential or small-scale units.
  • Up to $25,000 for direct current fast chargers or fuel cell charging units.
• Armed Forces Retirement Pay Exemption:
  Up to $30,000 can be excluded from income.
• Home Fire Recovery Tax Credit:
  Taxpayers whose homes were destroyed by wildfires in 2021, 2022, or 2023 can claim a nonrefundable credit of up to $50,000 for qualified home expenditures for building a new home. Unused credit may be carried forward for three years.
• $500 Deduction for Teachers:
  Teachers can deduct up to $500 from taxable income for classroom supplies they purchase.
• Geothermal Ground-Coupled Heat Pump Credit:
  A credit will be available for installing geothermal ground-coupled heat pumps.

North Carolina:

• Reduced Individual Income Tax Rate: The individual income tax rate will be reduced to 4.5%.

Ohio:

• Single Individual Tax Rate: Ohio will implement a single tax rate of 3.5% for all individual taxpayers.

Oregon:

• IRC Conformity: Oregon law will conform to the Internal Revenue Code (IRC) as of December 31, 2023.
• New Subtraction for Wildfire Litigation:
  • A subtraction will be allowed for income resulting from a settlement or judgment in civil actions arising from wildfires declared as a state of emergency by the Governor or as a federally declared disaster.
  • A subtraction will also be allowed for legal fees incurred in wildfire-related litigation.
• Voluntary Self-Identification of Race and Ethnicity:
  Beginning in January 2025, taxpayers can choose to provide information about their race and ethnicity when filing their personal income tax return.

Pennsylvania:

• Reduced Corporate Tax Rate: The corporate tax rate will be reduced to 8.49%.

Rhode Island:

• Rhode Island EITC: The Rhode Island Earned Income Tax Credit (EITC) will be 16% of the federal EITC.

South Carolina:

• Top Individual Tax Rate: The top individual income tax rate will be 6.2%.

Utah:

• Reduced Tax Rate: The tax rate for both individual and corporate taxpayers will be reduced to 4.55%.
• New Nonrefundable Child Tax Credit:
  • $1,000 per eligible child aged 1–3.
  • The full credit is available for taxpayers with adjusted gross income (AGI) below:
    • $43,000 for Single or Head of Household.
    • $54,000 for Married Filing Jointly.
    • $27,000 for Married Filing Separately.

Vermont:

• Renter Credit: Renters with up to 65% of the Area Median Income will now be eligible for the credit.

West Virginia:

• Social Security Benefits Subtraction:
  Taxpayers can subtract 35% of the amount of Social Security benefits taxable on the federal return from West Virginia taxable income. This subtraction will increase to 65% in 2025 and 100% in 2026 and beyond.
• Motor Vehicle Credit:
  A refundable credit is available to individuals, partnerships, LLCs, and corporations for the amount of West Virginia ad valorem property tax paid on a motor vehicle owned by the taxpayer.
  For more details, refer to the Motor Vehicle Property Tax Adjustment Credit information on the West Virginia Tax Division’s website.
• Disabled Veterans Real Property Tax Credit:
  Eligible disabled veterans who are homeowners can claim a credit for actual property taxes paid. Veterans must attach receipts for the property tax paid and their disability rating letter from the Department of Veterans Affairs when claiming the credit on their West Virginia individual income tax return.
  For more information, see the Disabled Veterans Real Property Tax Credit information on the West Virginia Tax Division’s website.
• Small Business Property Tax Adjustment Credit:
  Small businesses can claim this credit on property taxes paid for qualifying real property. To qualify, businesses must have appraised personal property of less than $1 million. The credit is 50% of the amount of West Virginia personal property tax timely paid, minus any credit received for the Motor Vehicle Property Tax Adjustment Credit.
  For more details, see the Small Business Property Tax Adjustment explanation on the West Virginia Tax Division’s website.

Wisconsin:

• Child and Dependent Care Credit:
  The credit will be 100% of the federal credit. The maximum related expenses for which the credit can be calculated are $10,000 for one qualifying child and $20,000 for two or more qualifying children.
• New Credit for Transportation Services for Blind Workers:
  A nonrefundable credit will be available, calculated as 50% of the qualifying transportation services paid by the claimant during 2024, with a maximum credit of $1,500.
• College Savings Accounts and Employee College Savings Account Contribution Credit:
  • The credit is calculated as 50% of the amount the employer contributes to an employee’s college savings account, with a maximum credit of $800 per employee.
  • The credit can be claimed by sole proprietors, but only for employees whose compensation is reported on Form W-2.

For more details, see Wisconsin Tax Bulletin 225 (April 2024), which includes additional corporation-related tax changes for tax year 2024.

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