Report Release: Reforming State Tax Codes for the 21st Century

As the economic landscape of the United States continues to evolve—driven by demographic shifts, technological disruption, and a redefined labor market—many state governments are finding themselves burdened by outdated, inefficient tax structures. In response, the Hamilton Taxation and Public Finance Research Center has released a landmark report titled “Reforming State Tax Codes for the 21st Century,” offering a blueprint for how states can modernize their tax systems to better serve citizens, adapt to change, and promote long-term fiscal sustainability.

This in-depth report, developed by our Tax Policy and Legislation Division, provides a comprehensive analysis of current state tax policies and outlines practical, equity-centered reforms. It presents detailed data visualizations, comparative case studies, and policy models tailored to reflect the unique economic realities and revenue needs of each U.S. state.

“States must begin to view tax reform not just as a fiscal necessity, but as an opportunity to build trust, promote fairness, and power economic growth,” said Dr. Caroline V. Prescott, Hamilton Director. “This report equips policymakers with evidence-based options that are rooted in today’s challenges and tomorrow’s possibilities.”

Key Themes and Recommendations:

• Tax Base Modernization: Broadening and diversifying the tax base by including digital goods, gig economy income, and environmental levies to reflect 21st-century economic activity.

• Equity-Driven Adjustments: Reducing regressivity by adjusting tax thresholds, improving Earned Income Tax Credit (EITC) policies, and addressing disparities in property taxation.

• Fiscal Resilience and Stability: Creating more responsive revenue systems that can withstand economic downturns and reduce reliance on volatile sources such as capital gains.

• Simplification and Transparency: Streamlining tax codes to reduce compliance burdens while enhancing public understanding through digital tools and open budget practices.

• Interstate Collaboration: Encouraging regional cooperation in sales tax enforcement, digital taxation, and regulatory alignment to close loopholes and prevent base erosion.

The report also identifies innovative approaches from state legislatures across the country—including recent reforms in Oregon, Colorado, and Massachusetts—that offer valuable lessons for others pursuing structural change.

Tools and Resources:

Accompanying the full report is an interactive online dashboard that allows users to explore the revenue mix, effective tax rates, and reform potential for all 50 states. This tool is designed for use by legislators, analysts, journalists, and civic educators seeking real-time, visual access to critical data.

The Center will also be hosting a webinar in June 2025 featuring a panel of state policymakers, fiscal experts, and members of the report’s authoring team to unpack the findings and discuss actionable next steps for reform. Registration opens soon so watch out for our announcement.