Taxes

As part of a growing trend, several states passed legislation this year raising the individual income tax rates and expanding taxes on incomes above $1 million. In Maine, Governor Mills signed a bill establishing a 2% surtax on income above $1 million for individual filers, raising the top rate from 7.15% to 9.15%. In Rhode Island, Governor McKee signed a bill increasing the state’s top marginal tax from 5.99% to 8.99% by 2029 on personal income above $1 million. Additionally, Washington passed a bill establishing a 9.9% tax on income above $1 million beginning in 2028. Washington is among the nine states that do not levy an individual income tax. Similar proposals were also considered in Illinois, Minnesota, and Vermont but failed to advance this year. While the 2026 legislative session saw an increasing number of states raising income tax rates, several states, including West Virginia, and North Carolina, passed measures to reduce them.

Minimum Wage

During the 2026 legislative session, at least 20 states considered proposals to raise the state minimum wage rates. However, most failed to advance, including bills in Hawaii, Vermont, Maryland and Illinois. Additionally, in Oklahoma, NFIB was successful in defeating State Question 832, a ballot measure that would have gradually raised the state’s minimum wage from $7.25 to $15 by 2029. NFIB ran a digital and radio ad campaign earlier this year opposing the measure. While most bills increasing minimum wage rates failed, Virginia was the only state to pass a minimum wage increase this year. The new law goes into effect in January 2027 and gradually raises the state’s minimum wage from $12.77 to $15 per hour by 2028. NFIB also ran an issue campaign opposing the measure in Virginia.

Extreme Heat Standards

This year, more than a dozen states considered measures establishing extreme temperature standards to prevent heat and cold-related illnesses in the workplace. Such proposals require employers to establish and maintain temperature-related illness prevention plans, provide training on heat illness injuries, and monitor workplace temperatures. While proposals were defeated in several states this year, including New York, Illinois, and Rhode Island, the states of Colorado and Virginia passed new heat standards. Virginia’s law requires the state’s Safety and Health Codes to draft standards requiring employers to provide access to shade, hydration, and rest periods. Employers would also be required to provide training and develop emergency response procedures. Colorado’s new law primarily requires the Division of Labor Standards and Statistics to collect data related to heat injury and develop a heat illness prevention plan by July 2028. However, it does not require employers to adopt the plan.

Tort Reform

From curbing Americans with Disabilities Act (ADA) website lawsuit abuse to third-party litigation funding and auto insurance reform, state lawmakers took on several tort reform measures this year. In Missouri, NFIB was successful in passing a measure to curb lawsuit abuse authorizing the state’s Attorney General to file a civil action against law firms or attorneys suspected of engaging in abusive ADA website violation and allowing small businesses to settle alleged violations before any lawsuits can be filed. NFIB ran a digital advertising campaign earlier this year in support of the bill, which was signed into law in May. In Georgia, lawmakers passed a similar bill allowing defendants to recover damages in cases associated with unsuccessful lawsuits claiming ADA website violations. In Ohio, the legislature passed a proposal regulating third-party litigation funding by increasing transparency and prohibiting agreements outside of the U.S. Finally, New York Governor Kathy Hochul signed an auto insurance reform bill to curb fraud and reduce costs.

State IRC Tax Conformity

Tax legislation in 2025, which made the 20% Small Business Deduction permanent for pass-through entities, included several changes to the Internal Revenue Code (IRC), including provisions related to bonus depreciation, individual personal income tax, and other tax deductions. Once IRC changes are enacted, states can affirmatively elect to adopt or decouple from the revised provisions of the IRC. As such, NFIB has made a concerted effort to ensure the 20% deduction is maintained on the state tax code. Most states adopted the Small Business Deduction provision and only two, Massachusetts, and Wisconsin rejected it.