Several states have made notable tax changes that are now in effect or on the horizon. Depending on where you live, these changes may affect your tax liability, your refund, or how your return is calculated. Here is a state-by-state breakdown of what changed and what you need to know.
Why Are States All Handling Taxes Differently?
According to the National Conference of State Legislatures (NCSL), each state’s tax decisions largely depend on its own financial position. Those with healthy budget reserves have been adjusting taxes downward or issuing refunds, while those facing tighter budgets have been looking for ways to raise revenue. The result is a varied situation across the country, with each state operating on its own timeline and priorities.
On the federal side, the One Big Beautiful Bill Act is now in place, and states have been deciding individually whether to align their tax codes with its provisions. Conformity decisions vary widely, and the downstream impacts are still unfolding.
What Tax Changes Are Happening by State?
Georgia
- A one-time Georgia surplus tax refund was authorized for residents who filed both their 2024 and 2025 Georgia income tax returns. The surplus refund amounts by filing status, according to the Georgia Department of Revenue, are:
- Up to $250 for single filers and married individuals filing separately
- Up to $375 for heads of household
- Up to $500 for married couples filing jointly
The refund will not exceed what was actually owed on the 2024 return. No action is required. Refunds are being issued automatically by direct deposit or check, and eligibility can be confirmed through the Georgia Tax Center.
- A 60-day suspension of the state motor fuel excise tax also went into effect in 2026, separate from the income tax refund. According to an FAQ issued by the Georgia Department of Revenue, the suspension eliminates:
- A gasoline tax of 33 cents per gallon
- A diesel tax of 37 cents per gallon
The change is tied to price pressures consumers have been facing at the pump.
South Carolina
- A three-bracket income tax system has been replaced with a two-rate South Carolina tax bracket structure, now in effect for the current tax year. According to the South Carolina Department of Revenue, the new rates are:
- 1.99% on taxable income up to $30,000
- 5.21% on taxable income above $30,000 (the previous top rate was 6%)
How taxable income is calculated has also changed. Rather than starting from federal taxable income, the state now starts from your federal adjusted gross income (AGI). Federal standard and itemized deductions no longer apply to the state return, and a new state-specific deduction takes their place. It is worth taking a close look at how these shifts affect your numbers before you file. The law also includes a provision that could lower rates further in future years if state revenue growth meets certain thresholds.
Washington
- The estate tax rate schedule was adjusted, bringing the top rate back down to 20%. A prior law had pushed the rates to the highest in the country, and this adjustment rolls them back.
- Starting January 1, 2028, a 9.9% tax will apply to household income above $1 million. Widely described as the state’s first broad-based personal income tax, it is expected to affect an estimated 21,000 filers once fully in place. For those with estate planning considerations or income above that threshold and ties to Washington, it is worth reviewing how these changes apply to your situation before 2028.
South Dakota
- A property tax reduction fund was created to lower school-related property taxes on owner-occupied homes. Ongoing funding is tied to a gradual adjustment in the statewide sales tax rate.
Iowa
- A proposed constitutional amendment was advanced that, if approved by voters, would require a two-thirds vote in both chambers of the state legislature to raise future income tax rates. A public vote is still needed before it takes effect.
As NCSL notes, these changes are often paired with trade-offs elsewhere, such as sales tax adjustments or shifts in how deductions are calculated, so the full picture is not always straightforward.
Curious Whether Your State Has Had Recent Tax Changes?
The states covered here are just a snapshot of what has been happening nationwide. If your state is not listed and you are wondering whether recent changes apply to your return, that is a great question to bring to a tax professional who can look at your specific situation.
At MBE CPAs, we work with clients across a range of states and stay current on tax law changes as they happen. Reach out to our team if you would like to talk through what recent legislation means for you.