POLITICS

States face decision on adopting federal tax deductions

PUBLISHED Dec 19, 2025, 10:36 AM ET

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States face decision on adopting federal tax deductions

Media Bias Meter

Sources: 6

Left 17%

Center 67%

Right 17%

Sources: 6

JEFFERSON CITY, Mo. — State legislatures will decide this year whether to adopt federal tax changes that create deductions for tips, overtime, car loans and business equipment. The U.S. Treasury urged states to conform so taxpayers receive federal reductions; states that do not conform could leave workers liable for state taxes on income untaxed. Adoption could save residents and businesses hundreds of millions annually while increasing state budget pressures due to added Medicaid and SNAP costs included in the bill signed summer. Michigan will implement a 24% wholesale cannabis tax on Jan. 1. Based on 6 articles reviewed and supporting research.

By Najma A. | JQJO News

Timeline of Events

Summer: Congress and the White House sign a bill creating federal tax deductions and program changes.
Post-signing: U.S. Treasury publicly encourages states to conform to federal tax changes.
States prepare for upcoming legislative sessions where some will opt in and others will not.
Retailers in Michigan report pre-January sales increases ahead of a 24% wholesale cannabis tax.
Jan. 1: Michigan's 24% wholesale cannabis tax takes effect and state conformity decisions influence next tax filing cycles.

Media Bias

Articles Published:: 6
Right Leaning:: 1
Left Leaning:: 1
Neutral:: 4
Distribution:: Left 17%, Center 67%, Right 17%

Who Benefited

Certain residents and businesses that receive tips, overtime, or invest in qualifying equipment would receive lower tax liabilities and could collectively save hundreds of millions annually if states adopt the federal tax changes.

Who Impacted

State governments and public programs could face increased fiscal pressure because lost revenue from conformity may coincide with higher Medicaid and SNAP costs mandated by the federal bill.