As state legislatures convene across the country in 2026, a clear pattern is emerging in state and local tax (SALT) policy. Across jurisdictions, three dominant trends have taken shape: (1) efforts to eliminate or reduce individual income taxes; (2) widespread property tax relief initiative; and (3) expansion of sales tax bases to capture modern, service-driven economy. These trends reflect a shift in how states balance revenue stability, competitiveness, and political feasibility.
Several states have introduced significant income tax reduction bills during Q1 of the 2026 legislative cycle, including both immediate and phased in relief.
In Georgia, legislators are considering multiple bills to provide corporate and individual income tax relief, such as these two notable bills:
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- HB 1001 would accelerate the reduction to the state’s flat income tax rate from 5.19% to 4.99% beginning in 2026.
- HB 880 would establish a longer-term framework to further reduce the income tax rate to approximately 3.99%, subject to revenue triggers.
In New York, lawmakers introduced S9110, coined the “Taxpayer Rescue Act”, proposes to eliminate income tax on the first $50,000 for single filers and $100,000 for joint filers to be phased in over a ten-year period.
Michigan HB 5519 proposes to roll back the state’s individual income ta rate to 3.9% from its current rate of 4.5%.
Missouri Senators are considering HJR 173 and 174, Constitutional Amendments that authorizes a gradual elimination of the individual income tax by 2032, subject to certain revenue growth triggers. For the purpose of reducing and eliminating the state income tax, the Constitutional Amendments authorize the legislature to expand the state and local sales and use tax base “to impose taxes on transactions involving any goods and services.”
In addition to income tax reductions, states are increasingly prioritizing property tax relief. With rising property values driving higher tax bills, legislators are turning to exemptions, credits, and other relief mechanisms to address taxpayer concerns. Notably, while many of these measures are targeted at homeowners, they can have broader implications for businesses, particularly where relief shifts the tax burden, affects local government revenues, or necessitates alternative revenue sources.
In Florida, legislators are considering HJR 203, a constitutional amendment to eliminate all non-school ad valorem taxes on homestead property beginning January 1, 2027. In addition to exempting homesteads from non-school property taxes, the proposal would prohibit local governments from reducing total funding for law enforcement, firefighters, and other first responders. HJR 203 was one of many property tax relief measures proposed but is the only bill to make it out of the House of Representatives.
For businesses, the District of Columbia has proposed two notable business personal property tax relief measures:
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- DC B26-0229 proposes to increase the business personal property exemption threshold from $225,000 to $325,000. The bill would also exempt filers from including the value of their tangible personal property on their tax returns if the value is below the threshold.
- (2) DC B26-0445 proposes to increase the Small Retailer Property Tax Relief Credit from $10,000 to $20,000, which allows retail businesses to offset their property taxes.
Indiana Representative J.D. Prescott proposed a full property tax abolishment in HB 1288, which would have abolished the assessment of tangible property after December 31, 2026, and the imposition of property taxes after December 31, 2027. To replace lost revenue, the bill proposed a significant restructuring of the state’s tax system, including expanding the sales and use tax base to services and redistributing those revenues back to local governments. Although Indiana House Bill 1288 2026 did not ultimately pass, it remains significant as one of the most far-reaching property tax reform proposals introduced this year, signaling growing legislative willingness to consider the full elimination of property taxes and a fundamental restructuring of state and local revenue systems.
To offset revenue losses from income and property tax relief proposals, many states are considering expanding and broadening their sales tax bases. In addition, many states are proposing to modernize their sales and use tax bases to better capture the digital and service-oriented economy.
Virginia is considering two bills to expand its sales and use tax base:
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- HB 978 would expand Virginia’s sales and use tax to a broad range of personal services, including admissions, fitness, and nonmedical services, and extend the tax to digital goods and electronically delivered products.
- HB 900 would expand the sales tax base to include certain digital products, cloud-based services, and retail delivery-related transactions.
Colorado legislators have proposed HB 26-1223, which would repeal the downloaded software sales and use tax exemption so that all software that is available for repeated sale and license qualifies as tangible property and thus is subject to sales and use tax. The bill exempts from sales and use tax downloaded software governed by a negotiable license agreement or developed for use by a particular user.
Minnesota HF 4343 would extend the state’s sales tax to advertising services, which would encompass all digital and nondigital advertising activities, excluding those related to printing, publishing, radio, and television. The definition includes various services such as layout, graphic design, production supervision, and online marketing strategies, while explicitly excluding web hosting and domain name registration services.
The bills highlighted above represent a sampling of the types of legislation being introduced across the country in 2026 and reflect broader trends in state tax policy, including income tax reductions, sales tax base expansion, and property tax relief. As these proposals continue to evolve, tracking developments across multiple jurisdictions can be complex and time-intensive. For assistance with multi-state legislative monitoring, analysis, and strategic guidance, please contact our team.