consumption taxes

U.S. states are divided in their tax revenue sources, with 27 states relying heavily on sales and consumption taxes in 2025, while 21 depend more on income taxes. States like Texas and Florida, which lack income taxes, generate most revenue through consumption-based taxes, whereas states such as California and New York rely on income and corporate taxes. This shift may disproportionately affect lower-income households and exacerbate racial inequalities.