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State Tax Cuts Put on Hold By Stimulus Clawback Rules

March 17, 2021, 8:45 AM

States are demanding the Biden Administration clarify a last-minute provision in the latest virus relief package that bars them from using federal benefits to cut taxes.

State policymakers have abruptly tabled legislative and administrative modifications to their tax codes until the Treasury Department issues guidance, fearing their actions might jeopardize benefits under the $1.9 trillion economic relief law. Congress provided $350 billion to states and municipalities to mitigate the impact of the Covid-19 pandemic, but a vague provision added at the end of the legislative process stipulates states cannot use the funds to “directly or indirectly offset a reduction in ...

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