As the tax filing deadline approaches, millions of Americans are expected to claim new federal tax breaks for tips and overtime pay available for the first time under Extensive tax law Issued by President Donald Trump.
But many people won’t get these same deductions when they fill out their state income tax forms. This is because it is up to each state to decide whether to match the federal tax changes, and many states have decided not to do so.
In states that do not comply with federal tax changes, workers who receive a federal tax credit Tips or overtime You’ll still owe state taxes on those earnings.
The deadline for filing taxes is Wednesday for the federal government and most states. Here’s what to know about state income tax rates and deductions:
In most states, individuals must fill out two separate tax forms. First, the federal income tax form. Then the state income tax form. The order is important, because most states use the numbers from the federal tax form as a starting point for state tax calculations.
There is no income tax in eight states – Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas and Wyoming. Washington state taxes income from capital gains but not wages and salaries. Missouri taxes income from wages and salaries but not capital gains.
Only about six countries Trump’s law reflects By offering tax breaks on tips, overtime pay or loan interest on new vehicles assembled in the United States
All three of these tax deductions are available to state income taxpayers in Idaho, Iowa, Montana, North Dakota and Oregon. Colorado offers tips and auto loan discounts but not the overtime tax credit. Alabama only offers a car loan discount.
Laws in many states automatically apply federal tax changes to state income taxes unless the governor and lawmakers opt out — e.g Officials in Colorado I did the overtime tax deduction. But in most states, tax breaks are only available if officials update state laws, as they did in Idaho.
State income tax forms in arizona list Tax deductions for tipsand overtime, auto loans and older residents based on an executive order issued in November by Democratic Gov. Katie Hobbs. She assumed the Republican-led Legislature would later pass a bill putting the tax breaks into state law.
But Arizona law has not changed. Hobbs vetoed the two tax relief bills because she objected to provisions that would have also adopted Trump’s corporate tax breaks. Lawmakers did not succeed in passing the third attempt.
“It’s a highly unusual situation,” said Adam Chodorow, a law professor at Arizona State University who specializes in tax law.
“We probably have a lot of people deducting tips” and overtime pay “who are not legally entitled to do so,” he said. “But they were directed by the state government to take those deductions.”
It is possible that Arizona could still enact a law that officially allows deductions. It can even be done retroactively, after the tax filing deadline.
Tipped workers and overtime workers got nearly tax breaks this year in some additional states.
South Carolina extended the tax refund filing deadline to Oct. 15 to allow the Republican-led Legislature time to opt in to federal tax cuts. Legislation to do so passed the House but was defeated in the state Senate.
Wisconsin’s Republican-led Legislature has passed bills to allow tips and overtime deductions. But Democratic Gov. Tony Evers vetoed them on April 3.
Officials in Georgia, Indiana and Michigan have passed laws allowing tax deductions for tips and overtime pay starting in tax year 2026. That means they’re not available to people currently filing their 2025 tax returns.
Meanwhile, Oregon could move in the other direction. Legislation pending before Democratic Gov. Tina Kotick would stop offering the auto loan deduction and some business tax breaks for the 2026 tax year.
Other states can still choose or eliminate the tax cuts for their 2026 taxes.