# Plain Language Summary: Let States Cut Taxes Act

This bill would allow states to reduce their income taxes without losing federal funding. Right now, if a state cuts its income tax, it can lose federal money because the federal government calculates aid based on state tax revenue. This bill removes that penalty, meaning states could lower taxes on their residents while still receiving the same amount of federal assistance they would have gotten otherwise.

The practical effect is that states would have more flexibility in their tax policies. A state could decide to cut income taxes to keep more money in residents' pockets or attract businesses, and it wouldn't automatically trigger a reduction in federal grants, Medicaid funding, or other federal support the state receives. This could benefit people living in states that choose to cut taxes, as they'd keep more of their income. However, it could also mean less state revenue overall, which might eventually lead to cuts in state services like education, roads, or social programs—unless the state finds other ways to make up the lost money.

The bill essentially shifts more power to individual states to make their own tax decisions without federal financial consequences. Whether this helps or hurts you depends on where you live and whether your state chooses to cut taxes, and how your state government decides to handle any resulting budget gaps.

Let States Cut Taxes Act

Braun, Mike

Let States Cut Taxes Act This bill removes a prohibition on states and territories using COVID-19 relief funding under the American Rescue Plan Act of 2021 to offset a reduction in revenue resulting from a reduction in taxes or a delay in the imposition of a tax or tax increase.