10 States With Major Tax Changes in Effect July 1 — Are You Affected?

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Summer is the time when you think about Fourth of July parades and how to treat sunburns — taxes usually don’t figure into the equation.

This year, though, several states put new tax policies into effect July 1, according to the Tax Foundation. Here’s what’s changing — and how it might impact your wallet.

1. Gas taxes: Oklahoma, South Carolina, Tennessee

It’s already expensive to fill up your car tank thanks to rising gas prices. But it’s worse in states with higher gas taxes in effect since the beginning of this month. Here’s what you can expect to pay in Oklahoma, South Carolina, and Tennessee.

Gas tax increase
State Old tax (gas) New tax (gas) Change Effect on 16-gallon tank Old tax (diesel) New tax (diesel) Change Effect on 26-gallon tank
Okla. 16 cents per gallon 19 cents per gallon 3 cents per gallon 48 cents 13 cents per gallon 19 cents per gallon 6 cents per gallon $1.56
S.C. 18 cents per gallon 20 cents per gallon 2 cents per gallon 32 cents N/A N/A N/A N/A
Tenn. 24 cents per gallon 25 cents per gallon 1 cent per gallon 16 cents 21 cents per gallon 24 cents per gallon 3 cents per gallon 78 cents

It might not seem like a big deal for Oklahoma residents to pay 48 cents extra for an entire 16-gallon tank of regular gas, but over time that adds up. If you fill up twice a week, you could end up paying an extra $49.92 per year for gas.

2. Sales tax change, expansion: Louisiana, Kentucky

Louisiana: A temporary sales tax increase was supposed to end this year, dropping from 5% to 4%. However, Louisiana lawmakers decided to extend the temporary hike — with a twist. Instead of keeping the tax at 5%, they dropped it to 4.45%. Not a complete end to the short-term increase, but it still will save Louisianans $5 on a $1,000 purchase.

Kentucky: It was less about a change to the sales tax rate and more about expanding what’s taxed in Kentucky. Formerly untaxed services are now subject to the state’s 6% sales tax, including:

  • Event admission fees
  • Extended warranty services
  • Laundry and dry cleaning services
  • Campsite rentals
  • Limousine services
  • Installation and repair of personal or digital property
  • Janitorial services
  • Indoor skin tanning
  • Landscape services
  • Veterinary services

3. Online sales tax collection change: 4 more states

Some states, such as California and Utah, already collect sales tax on online transactions. And some changes are looming for online sales tax collection, although they haven’t been fully implemented yet. Now that the U.S. Supreme Court has ruled that states can collect sales taxes from sellers that aren’t physically located in the same state as the buyer, some states are looking to expand their efforts.

These four states have legislation in progress with an effective date of July 1, but the laws might be refined in light of the ruling:

  • Connecticut
  • Hawaii
  • Kentucky
  • North Dakota

So if you live in one of those states, you might not be getting the same deals when you shop online, once the laws are finalized.

4. Cigarette tax: Oklahoma, Kentucky

In Oklahoma and Kentucky, state governments are changing the cost of smoking by adding new taxes, based on a 20-cigarette pack.

Cigarette tax increase
State Old tax New tax Change
Okla. $1.03 per pack $2.03 per pack $1.00 per pack
Ky. 60 cents per pack $1.10 per pack 50 cents per pack

So if you smoke three packs a week, you’re looking at spending an extra $156 each year in Oklahoma, thanks to this higher tax.

5. Marijuana tax: Massachusetts

Residents of Massachusetts voted to allow recreational marijuana in 2016, but July 1 marked the first date of these recreational sales. As part of the sale of marijuana, buyers can be charged the following taxes:

  • State sales tax of 6.25%
  • An excise tax of 10.75%
  • Optional local sales tax of up to 3%

Depending on the locality, marijuana buyers could pay as much as 20% in taxes on their purchases. If you can get an ounce of marijuana for $120, you could end up paying $144 total if you’re subject to the maximum taxes.

6. Corporate tax: Indiana

Indiana is taking the following tax changes to the corporate level. Corporate income taxes are being lowered until fiscal year 2022, when they’ll reach 4.90%.

Corporate income tax change in Indiana
FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
6.25% 6.00% 5.75% 5.50% 5.25% 4.90%

If you expect some of those corporate tax savings to come down to you in the form of increased wages, though, don’t hold your breath. Of the $1.5 trillion tax cut enacted in the U.S. last year, only 15% of savings are going to employees, according to Bloomberg.

Keep an eye on your wallet

In many cases, small tax increases won’t have a huge impact on your wallet in the short term. However, the tax hikes can add up over time — especially when combined with all the other taxes you pay.

Your effective tax rate could go up, depending on your state. If you don’t like the new taxes or want to weigh in on potential future tax changes, contact your representatives and get involved to advocate for your position.

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.