How States' Dependence on Corporate Taxes Has Declined

Most increased their reliance more on income taxes from people instead of corporations in the past few decades. View data for every state.
by | January 6, 2016
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For most states, corporate income taxes represent a slow growing source of revenue. A story in the January issue of Governing explores how Michigan and other states have experienced sharp drops in these tax collections.

The Census Bureau collects tax data from states as part of its Annual Survey of State Government Finances. To see how these sources of revenue have changed over time, we’ve compiled financial data for each state dating back to 1950.

Corporate income taxes account for a small slice of a state’s total budget, ranging from just over 5 percent of total revenues in Illinois and New Hampshire to nothing in states that don’t collect any. On average, states’ reliance on such taxes has gradually dwindled over the past few decades:

REvenue Share

The following table lists states’ net corporate income tax share of total revenues for fiscal years 2013, 2000 and 1990. (Collections can fluctuate in a given year; see third graph in data tool for complete historical data.)

SOURCE: U.S. Census Bureau Annual Survey of State Government Finances

Nationally, the Census survey suggests inflation-adjusted net corporate income revenues have grown on average at about half the pace of total revenues over the past two decades. Generally, most sources of revenue increase over time as the population and demand for services expands.

Another way to gauge corporate taxes is to compare them to what states are collecting from tax returns filed by individuals. Of the 43 states with income taxes, individual income tax collection growth (measured as a percentage change) outpaced corporate tax revenues in 31 states since 1990.

States like Connecticut, Louisiana, Michigan and Ohio have seen real corporate income revenues decline by more than 50 percent over this time period, while collections from individual income returns still increased. It should be noted, though, that any gross receipts collected from these states are not included in the Census tax revenue figures.

State Income Tax Data

Select a state to view its corporate and individual income tax revenue data: