States Opt Out of Trump Tax Cuts, Sparking GOP Backlash

Local officials in Democratic-led states and cities move to exclude federal tax breaks from their own tax codes.

Published on Feb. 12, 2026

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Across the country, state and local policymakers are grappling with the impact of the Republican-led tax overhaul passed by Congress in 2025. Many states use the federal definition of taxable income as a starting point for their own income taxes, so the new federal tax breaks can also reduce the amount of money states can tax. In response, some Democratic-led states and cities have moved to exclude the new federal tax cuts from their own tax codes, sparking a political backlash from Republicans in Congress.

Why it matters

The technocratic relationship between state and federal income taxes has become a political flashpoint, as the Trump administration and Republicans tout the tax cuts as a 'refund boom' to boost their electoral prospects. States that opt out of the federal tax breaks are denying their residents the full benefits touted by the GOP, leading to accusations that they are 'punishing their own people' for political reasons.

The details

In Colorado, lawmakers made sure a new federal deduction for overtime pay would not apply to the state's income tax. Delaware lawmakers moved to prevent new federal tax breaks for businesses from hitting the state's coffers. And in Washington, D.C., the City Council voted to exclude several of the new federal tax cuts from the district's tax code. Republicans in Congress have pushed back, with the House passing a resolution to force D.C. to adopt the federal tax cuts, despite warnings from local officials that it would upend the city's filing season.

  • In 2025, Congress passed a broad tax cut law.
  • Last year, Delaware lawmakers called a special session to pass legislation barring companies from using new, federal tax standards for deducting the cost of investments.
  • Last week, the House passed a resolution forcing the District of Columbia to adopt the federal tax cuts.

The players

Muriel E. Bowser

The mayor of Washington, D.C., who warned that adopting the federal tax cuts would upend the city's filing season.

Brandon Gill

A Texas Republican representative who sponsored the legislation to force D.C. to adopt the federal tax cuts.

Ron Wyden

The top Democrat on the Senate Finance Committee, who criticized the GOP move to nullify D.C.'s policy choices.

Bruce Bannister

A Republican and the chairman of the Ways and Means committee in the South Carolina House, who is pushing legislation to switch the state to a broader definition of income and then tax it at a lower rate.

Kerri Evelyn Harris

A Democratic majority leader in Delaware's House, who said the state could not afford to pick up the new federal tax breaks for large corporations.

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What they’re saying

“The D.C. council would rather punish their own residents, their own people, than recognize the achievements of President Trump's legislation.”

— Brandon Gill, Texas Republican representative (nytimes.com)

“Republicans wanted to 'trample on the rights and priorities of people they don't even represent.'”

— Ron Wyden, Senator, top Democrat on the Senate Finance Committee (nytimes.com)

“For the longest time our tax code has been pretty much a mirror image of what happens at the federal level, but if we had picked up these tax cuts for large corporations we were looking at upward of $400 million in projected losses. We determined we could not stall.”

— Kerri Evelyn Harris, Democratic majority leader in Delaware's House (nytimes.com)

What’s next

The Senate is expected to take a procedural step toward passing the measure to force D.C. to adopt the federal tax cuts.

The takeaway

The clash over state responses to the federal tax overhaul highlights the political tensions around tax policy, as Republican-led efforts to cut taxes at the national level collide with Democratic-led states' desires to maintain control over their own tax codes and revenue streams.