Updated on March 21, 2024

The Urban-Brookings Tax Policy Center (TPC) uses its state-of-the-art microsimulation model to analyze the revenue and distributional consequences of federal tax policies and major tax reform proposals.

In 2016, TPC expanded the model to include state tax policies and interactions between state and federal tax systems and created the Tax Policy Center State Tax Model (STM).

To perform state-level analyses, TPC created additional weights to make the tax model’s national database representative for each of the 50 states, the District of Columbia, and other areas.[i] TPC imputes these state weights using a method that matches each state’s weighted totals of chosen observed characteristics to state targets. The targets are based on published IRS tax return data by state. Because of lags in the reporting of IRS data, targets are developed for subsequent years using projections for the national economy.

The STM allows TPC to  analyze how federal tax law changes effect households at various income levels in different states (e.g., The Effect of The TCJA Individual Income Tax Provisions Across Income Groups and Across the States) and to produce revenue and distributional estimates for state tax laws and proposals (e.g., Constructing a Child Tax Credit That Fits Every State).

Endnotes

[i] This includes, for example, returns filed from Army Post Office and Fleet Post Office addresses by members of the armed forces stationed overseas; returns filed by other U.S. citizens abroad; and returns filed by residents of Puerto Rico with income from sources outside Puerto Rico or with income earned as US government employees.