States Exploring Tax Changes in Response to Federal Overhaul

In New Jersey and California, top Democratic officials want to let people make charitable contributions to the state instead of paying certain taxes. In Connecticut and New York, officials are exploring a switch from income taxes to new ones on payroll. A few governors have even called for tax cuts.

The ideas are bubbling up as state lawmakers begin their 2018 sessions and assess the effects of the Republican tax overhaul that President Donald Trump signed into law last month. Lawmakers and governors in some states are grappling with how to protect their constituents.

The federal policy implements a maze of changes. It cuts tax rates and nearly doubles the standard income deduction. Yet it also caps or eliminates some popular itemized deductions, and sets the personal exemptions to zero.

More than 40 states have income taxes, and nearly all of them rely to some degree on definitions from the federal tax code.

Economists expect that many states will see their revenue rise because they tie their tax laws to federal provisions such as those on personal exemptions, which lower the bills based on the size of households.

 In Maryland and Michigan, the Republican governors have said they will introduce tax cuts to compensate, after the GOP bill eliminated the personal exemption.