What is the main source of revenues at the state level?

The primary source of revenues at the state level is often derived from sales and income taxes. These taxes represent a significant portion of state funding, as they are levied on a broad base of consumers and taxpayers. Sales taxes are applied to the sale of goods and services, which can generate considerable revenue during economic growth when spending increases. Income taxes, which may be structured as flat or progressive rates, also provide a steady stream of revenue, especially in states that rely more heavily on personal income tax as a revenue source.

In comparison to other types of taxes, such as property taxes, excise taxes, and corporate taxes, sales and income taxes are generally more prevalent at the state level, enabling states to fund essential services such as education, healthcare, and infrastructure. Property taxes tend to be more common at the local level rather than the state level. Excise taxes target specific goods (like tobacco and alcohol) and while they contribute to total revenues, they are typically less comprehensive than sales or income taxes. Corporate taxes are significant but usually account for a smaller portion of state revenues compared to individual income and sales taxes, as not all states impose a corporate tax.

This combination of sales and income taxes makes them the primary revenue sources for state governments, reflecting