Published in partnership with The American Prospect.
Donald Trump and congressional Republicans aren’t the only ones enacting massive tax cuts that heavily favor the wealthy and big business. Republican state legislators backed by corporate-funded advocacy groups have also made significant strides toward flattening or eliminating once-progressive state income taxes in this year’s legislative sessions.
The Congressional Budget Office estimates that the passage of Trump’s “One Big Beautiful Bill Act” (OBBA) on July 3 will result in the loss of $3.7 trillion in federal revenues over the next decade, with the lion’s share of tax benefits going to America’s richest 1%.
Many red states are moving in the same direction. Two states (Kansas and Ohio) have enacted flat tax legislation this year, making a total of 16 states that now tax wealthy and low-income residents at the same rate. Two states (Mississippi and Oklahoma) passed bills to phase out their income tax altogether, and two more states (Missouri and Montana) made significant tax changes headed in both directions.
These developments reflect the continuation of a major push in recent years by billionaire industrialist Charles Koch’s advocacy group Americans for Prosperity (AFP), right-wing “think tanks” affiliated with the State Policy Network (SPN), and the American Legislative Exchange Council (ALEC).
AFP mounted a $20-million campaign to make the permanent renewal of Trump’s controversial 2017 tax cuts the centerpiece of the OBBA, claiming that it reached more than a million voters and generated hundreds of thousands of calls to members of Congress.
And the group has been busy promoting regressive income tax changes at the state level as well. Feeling flush from the influx of billions in Covid-era aid from the federal government and higher than expected post-Covid revenue collections, more than half the states in the U.S. have moved to cut income taxes in recent years. And, between 2021 and 2024, six states (Arizona, Georgia, Idaho, Iowa, Louisiana, and Mississippi) passed laws to enact flat taxes, which is often a first step toward eliminating the state income tax.
That amounts to “something of a flat tax revolution,” according to the conservative Tax Foundation. Within that “span of 3.5 years, more states enacted laws converting graduated-rate individual income tax structures into single-rate income tax structures than did so in the whole 108-year history of state income taxation up until that point.”
“Lower taxes have long been a driving force behind economic opportunity, entrepreneurship, and financial stability,” claims AFP.
Flat tax opponents argue there is no evidence that cutting state income taxes drives economic growth. Between 2021 and 2023, “26 states cut their personal and/or corporate income tax rates, and many of these states have little to show for it besides budget crises, struggles to fund public services, and threats of downgraded credit ratings,” according to the nonpartisan Institute on Taxation and Economic Policy (ITEP).
The “tax-cutting spree” in response to temporary budget surpluses is “both permanent and tilted toward wealthy households and corporations,” notes the Center on Budget and Policy Priorities. The cuts “will weaken state revenues by large and growing amounts over time, limiting these states’ ability to maintain support for schools and other vital public services or make new investments that can strengthen the economy and promote opportunity.”
And states that cut or eliminate income taxes “often rely more heavily on sales and excise taxes that disproportionately impact lower-income families,” ITEP points out.
State Income Tax Status and Activity
2025 Legislation
Legislation and a constitutional amendment designed to advance the right-wing tax agenda of these groups were in play in at least eight states this year and succeeded in six of the eight.
Kansas
In Kansas, AFP joined with the state’s SPN affiliate, Kansas Policy Institute, to push for a plan (SB 269) to reduce the tax rate based on the amount of revenue collected by the state the previous year, adjusting for inflation, so that taxes are reduced over time to a flat 4%. As revenue from other taxes grows to fund the state’s budget, income tax rates would be lowered accordingly.
In April, Republican supermajorities in both chambers overrode a veto by Governor Laura Kelly (D) to enact the bill into law.
Louisiana
In December, Louisiana became the 14th state to adopt a flat personal income tax. As previously reported by the Center for Media and Democracy (CMD), the legislation was aggressively pushed by AFP and the state’s SPN group, the Pelican Institute, which produced media ads, encouraged members to contact their legislators, and flooded mainstream media with the results of studies backing their arguments in favor of tax reform.
Not content with their victory, the groups teamed up with Governor Jeff Landry (R) to promote Amendment 2, a ballot measure in March to amend the state constitution to further lower the income tax rate from 4.25% to 3.75%, require a supermajority vote on tax legislation, and make other tax law changes. As of election day, Landry’s PAC, Make Louisiana Great Again, reported spending $292,000 in support of the measure, and AFP had ponied up $157,000.
Despite those efforts, voters soundly defeated Amendment 2 by a nearly 2–1 margin (65% voting no). The Pelican Institute released a statement on the vote saying, “It’s never been more clear how hard the deeply-entrenched status quo will fight against transformational reforms. … Rest assured, however, the fight is not over; in fact, it’s just beginning.”
Mississippi
In March, AFP helped pass HB 1 in Mississippi. Signed by the Republican governor, the new law follows in the footsteps of a 2022 law that lowered the personal income tax rate from 5% to 4.4% in 2025 and to 4% in 2026 for the highest income earners. HB 1 will further cut the rate to 3% by 2030, and then phase out the income tax altogether in annual decrements of .3% if the state meets certain fiscal requirements.
AFP celebrated the bill’s passage, claiming, “This is the start of a new economic era for Mississippi where hardworking taxpayers can keep more of their money and invest it where they see fit.”
However, an analysis by ITEP found that the new law will save the bottom 20% of income earners just $42 a year compared to $41,420 for the wealthiest 1% of households, while depleting the state’s coffers by $2.7 billion annually.
Missouri
This year, Missouri may become the first state to eliminate the capital gains tax, exempting profits from the sale of stocks, real estate, cryptocurrency, and other capital assets from the state income tax. The Republican-controlled legislature passed the bill on a party-line vote at the end of May and sent it to Governor Mike Kehoe (R), who supports phasing out state income taxes and is expected to sign it into law.
ITEP notes, “Nearly two-thirds of capital gains that Missourians report on their federal tax forms flows to households with incomes over a half-million dollars per year.”
The state department of revenue estimates that the elimination of this tax will cost the state $111 million per year, while ITEP estimates that based on IRS data the annual cost would be closer to $600 million.
As in other states, AFP intends to eliminate the state income tax in Missouri and sees the move to get rid of the capital gains tax as an important first step, just as it considers the flattening and reduction of taxes in other states as a solid step towards that same goal.
Montana
At the end of March, Governor Greg Gianforte (R) joined representatives from AFP at the state capitol to announce a budget proposal that makes the biggest individual income tax cut in Montana’s history, reducing the rate paid by most taxpayers from 5.9% to 4.9%.
In April, the legislature passed HB 337 on a mostly party-line vote as a compromise alternative to the governor’s proposal. It lowers the top income tax rate to 5.65% in 2026 and 5.4% in 2027, increases the number of Montanans eligible for the lower tax bracket of 4.7%, and doubles the earned income tax credit — at an estimated cost of $278 million in lost revenues per year.
Ohio
Ohio has been reducing its income tax rates and top income tax brackets for the past two decades, with rates now ranging from 2.75% to 3.5%. According to Policy Matters Ohio, those cuts cost the state $12.8 billion in lost revenue each year, with the vast majority of savings going to the top 1% of earners. Meanwhile, increases in sales, excise, and business taxes have all but erased the savings for lower-income residents.
As in other states, the state’s SPN group, the Buckeye Institute, has been lobbying since 2023 to flatten the income tax to 2.75 % as a first step toward eliminating the tax entirely by 2030.
Companion bills (SB 3 and HB 30) were introduced in both chambers this year to do just that, with the enthusiastic support of AFP Ohio, which launched a full-fledged “Save Our Salary” campaign in May to support the measure. While neither bill moved out of committee, the Senate announced on June 26 that the legislature had incorporated a 2.75% flat tax in its final state operating budget that would take effect in 2026, at an estimated cost of $1.1 billion per year in lost revenue. No Democrats voted in favor of the budget.
Millionaires, who represent 1% of Ohioans, will reap 40% of the savings, according to Policy Matters Ohio. AFP Ohio calls the flat tax measure “a leap in the right direction.”
Governor Mike DeWine (R), who has not supported a flat tax in the past, nonetheless approved the budget with the flat tax on June 30.
Former GOP presidential hopeful Vivek Ramaswamy has made elimination of Ohio’s individual income tax a centerpiece of his 2026 Republican primary campaign for governor to replace DeWine, who is termed out.
Oklahoma
In May, Governor Kevin Stitt (R) signed HB 2764, which reduces the state’s top individual income tax rate by a quarter of a percent (to 4.5% from 4.75%) and restructures tax brackets with an eye toward phasing out the tax in quarter-point increments over time. The new law is expected to result in an annual loss of $350 million in revenue.
The SPN group in Oklahoma, the Oklahoma Council of Public Affairs, praised the legislature and the governor “for cutting Oklahoma’s penalty on work, the personal income tax, and putting the tax on a gradual path to full repeal without raising other taxes.”
South Carolina
In March, AFP announced a six-figure campaign supporting a proposal (H. 4216) in South Carolina that would reduce the state’s income tax to a flat 3.99% by the end of 2026 (down from the current top bracket of 6.2%) and then phase the tax out altogether if certain revenue goals are met.
AFP said it will “utilize door knocking, mail, digital and radio ads, and the newly launched website, AxeTheTaxSC.com, to educate South Carolinians about the bill and urge legislators to support it.”
The bill passed the House in May and has been referred to the Senate Finance Committee. The South Carolina Policy Council, an SPN affiliate, applauded the action as “a major step toward meaningful tax reform.”
While the legislature has adjourned for this year, House Republicans hope the Senate will pass the bill next year in time for it to be included in the 2026 budget process.
The legislature’s Revenue and Fiscal Affairs Office estimates that the proposed changes would result in a loss of $200 million in tax revenues per year.
Meet the Anti-Tax Advocates
The groups driving red states to flatten and eliminate income taxes are heavily backed by billionaires, corporations, and right-wing foundations.
Americans for Prosperity, which maintains an extensive lobbying operation in Congress and 38 states, works to advance Koch’s agenda by supporting anti-union legislation, opposing Medicaid expansion, reducing corporate regulations, and protecting the fossil fuel industry. Its budget, which is mostly bankrolled by the Koch-funded Stand Together Chamber of Commerce, was $168 million in 2023.
AFP has mobilized its massive operation to campaign for flat tax and tax elimination measures in the states by running ads on digital and broadcast television, launching petitions, and paying canvassers to urge voters to contact their state legislators.
The State Policy Network and its state affiliates have combined revenues of more than $250 million. An analysis by CMD found that the primary funders of the national umbrella organization are the Koch network’s preferred pass-through funding vehicles DonorsTrust, $58 million (2014–23), and Donors Capital Fund, $12.5 million (2014–20). Other major funders in recent years are the Roe Foundation, $12.7 million (2014–23), the Searle Freedom Trust, $9.6 million (2014–23), and the Walton Family Foundation, $6.2 million (2014–23).
As part of its Bradley Files investigative series in 2017, CMD found that the Milwaukee-based Bradley Foundation funneled approximately $133 million between 1993 and 2015 to SPN’s affiliates, and to the broader network of national right-wing groups that SPN calls its associates, according to Bradley’s own grant summary documents.
ALEC, the bill mill where lobbyists and state legislators meet behind closed doors to push a wide-ranging, pro-corporate and right-wing agenda, also promotes a model bill on flat taxes as a critical step in the march toward its ultimate goal of eliminating personal income taxes.
The ALEC model calls for a flat-rate tax on personal and business income, but states that “the ultimate flat tax on income is 0%, or no income tax at all.”
ALEC also proposes another model bill — which has yet to be adopted in any state — to allow an individual to choose to pay either a flat tax or the tax rate under current law in the state. The organization believes that most people would likely find they do better paying a flat tax rate and that once everyone is paying the same rate, the flat tax percentage could be decreased incrementally until it’s entirely eliminated.
A 2023 analysis by CMD found that the top funders of ALEC between 2017 and 2021 were the Bradley Foundation, Charles Koch’s foundations, the Searle Freedom Trust, and DonorsTrust. Less than 1% of the group’s funding comes from legislator dues.
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