State Tax Withholding Weakens as Inflation Hits US Wages (1)

The share of American workers’ wages going to state and local tax coffers through withholding and estimated tax payments began to soften this spring, in yet another sign of a slowing US economy.

States like California, Illinois, Michigan, and New Jersey saw steep declines in estimated tax payments due to stock market volatility and economic uncertainty, according to a recent analysis by the Urban-Brookings Tax Policy Center. Inflation-adjusted withholdings were largely flat in states like Minnesota, Connecticut, and Maryland in the same period. Taken together, the two income tax components can often be an early signal to economists of what ...