The economy is recovering, but jobless claims remain high. The Federal Reserve projects the nation’s economy will grow 6.5 percent this year. That’s the fastest pace of growth in 40 years, thanks to growing vaccination rates and about $1.9 trillion in new federal tax cuts and spending. But Fed Chairman Jerome Powell cautioned it still will take time to bring 10 million people who have lost jobs due to COVID-19 back into the labor force.
No reprieve for estimated payments or for many state income tax returns. The IRS’s decision to delay the tax filing deadline until May 17 comes with some caveats. Quarterly estimated payments for income from self-employment, investments, alimony, and rent still must be paid by April 15. And unless states that piggyback on federal returns delay their own tax deadlines, filers still will have to calculate their federal liability to fill out their state returns by April 15. So far, only California, Pennsylvania, and Maine have postponed their deadlines.
Next Tuesday on the Hill. The Senate Finance Committee holds a hearing on how US international tax policy affects American workers, jobs, and investment. Treasury’s Deputy Assistant Secretary for Tax Analysis Kim Clausing, Former Assistant Secretary For Tax Policy Pam Olson, NYU Tax Law Center Executive Director Chye-Ching Huang, and University of Michigan Economics and Law Professor James Hines will testify. Also Tuesday, the House Financial Services Committee will hold an oversight hearing on the pandemic response of the Treasury and Federal Reserve.
Alaska lawmakers move to double the gas tax. Alaskans pay 8 cents per gallon of gasoline—a rate that has not changed since 1970 and is the lowest in the US. The House Transportation Committee approved a bill to double the tax to 16 cents. The House Finance Committee now needs to review it. The added revenue would fund highway maintenance as well as efforts to fight and prevent oil spills. Alaska’s business and industry groups broadly support the measure.
Idaho House approves an income tax rebate. In a partisan vote, the GOP-led House sent an income tax cut to the Senate this week. The bill would cut all income tax rates, and reduce top individual and corporate tax rates from 6.925 percent to 6.5 percent. It also provides a one-time tax rebate worth a total of $220 million. Households that filed personal income tax returns in 2020 would receive a rebate of $50 for each taxpayer and dependent or 9 percent of income taxes paid in 2019, whichever is greater.
Georgia Senate passes a state income tax cut. The Georgia Senate approved a state income tax cut by raising its standard deduction by $800 for single filers and $1,100 for joint filers. The $140 million annual tax cut would be less than $100 for a married couple filing jointly. Georgians who are over 65 or blind would get an additional $1,300 deduction. Georgia is among the states threatening to sue to block a provision in the American Rescue Plan that prohibits states from using relief funds to fund tax cuts. Georgia officials say their tax cut is unrelated to the federal aid.
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].
