Illinois

State lawmakers are grappling with a range of challenges as their fiscal outlooks deteriorate, federal tax enforcement wanes (after the Trump administration cut the IRS workforce by 25 percent), and a rewritten federal tax code sends states scrambling to decide what changes they might want to make in their own codes.

While some may be excited for a romantic Valentine’s Day this weekend, many state lawmakers are breaking up and decoupling from recent federal tax changes that are poised to leave states with revenue shortfalls – much like a bad date who forgets their wallet and asks you to pick up the tab.

The results are a mixed bag, with some states enacting promising policies that will improve tax equity and others going in the opposite direction.

They should take steps to protect and boost their own revenues. And they should take a second look at their own tax cuts.

2025 saw an intensification of state and local tax fights across the country, as well as growing experimentation with local-option taxes, levies, fees, and tourism taxes aimed at keeping budgets afloat while also navigating political constraints imposed by state legislatures.

As we kick off a new year, several states are facing revenue shortfalls. Some lawmakers are approaching the challenge with sustainable and equitable solutions.

With a little over a week left, some states are solidifying their spots on the tax policy “naughty or nice” list.

It’s wildly inappropriate for a U.S. Treasury Secretary to lean on states to adopt or not adopt specific federal provisions in their own state tax codes.