Tax Cuts Won and Lost in the Midterms
Voters punished Republicans at the polls, but their appetite for lower taxes proved more complicated at ballot initiatives.
Republicans received a thumping defeat in the midterm elections. As voters overwhelmingly rejected GOP candidates, they didn't outright repudiate tax policies that have historically been championed by Republicans. While some states passed ballot initiatives to raise taxes, there were several wins for fans of low taxes. Here are some of the notable outcomes from Election Day.
Low-Tax Wins
1. North Carolina
Voters in North Carolina approved changes to the state constitution that would cap personal and corporate income taxes at 3.5 percent. The measure, which passed with 61.2 percent of the vote, does not change North Carolina's taxes for now, but it does make it nearly impossible for the Legislature to raise taxes in the future. The state's 2027 personal income tax rate is now expected to drop to 3.49 percent, below the new cap. Meanwhile, its corporate income tax rate stands at just 2 percent, following the passage of a 2021 law that will eliminate the tax by 2030.
Voters in the Tar Heel State also approved a constitutional amendment requiring the state Legislature to impose limits on how much local governments can increase their property tax collections. However, unlike the income tax amendment, this measure does not specify what the tax limits should be. Instead, it allows lawmakers to determine how restrictive those limits should be and whether any exemptions should apply. With property taxes accounting for more than one-third of local government funding in North Carolina, those limitations are unlikely to be drastic. Still, these votes signal statewide support for lessening the tax burden.
2. Iowa
Iowa voters approved a constitutional amendment requiring a two-thirds majority in both chambers of the state Legislature to increase corporate or individual income taxes. Amendment 1 was passed with 56.2 percent of the vote and follows years of income tax reductions in the state. In 2025, Iowa introduced a flat personal income tax rate of 3.8 percent. Free market think tanks praised the reform, with the Buckeye Institute arguing that "Iowa's economy is becoming more competitive because of the flat tax."
Although Amendment 1 does not reduce taxes, it makes it harder for future legislatures to reverse its recent low-tax reforms.
3. Florida
Florida was among a few states to pass property tax reforms, but the Sunshine State's were the most significant. Amendment 3 passed with 62 percent of the vote, increasing the property tax exemption on primary residences to $250,000 and halving the maximum annual increase in assessed values for non-primary residences from 10 percent to 5 percent.
While this does signal popular support for low taxes, rolling back property taxes "can be a tricky issue for libertarians to parse," notes Reason's Christian Britschgi. Property taxes are generally considered the least damaging tax to economic behavior. So the "wisdom of a property tax cut," Britschgi writes, "comes down to how local governments respond to the lost revenue and the design of the tax cut itself."
"If they respond by hiking sales taxes or demanding more state financial aid, the result would be the same-sized government, more inefficient taxes, and greater fiscal centralization. None of those outcomes would be ideal."
4. California
California voters considered Proposition 42, a constitutional amendment that would prohibit new state taxes on personal property—including stocks, business interests, and retirement savings—as well as certain retroactive taxes. The measure was particularly popular outside of the state's urban areas.
It was introduced to nullify Proposition 40, which would introduce a one-time 5 percent tax on billionaires' wealth. (At press time, Proposition 40 is still too close to call.) But Proposition 42's implications are far more widespread than billionaire wealth: The measure will protect anyone with money in a savings, retirement, or investment account.
Low-Tax Losses
1. Washington
Washington voters rejected Initiative 645, a proposal to repeal the state's newly introduced 9.9 percent income tax on annual earnings above $1 million. It would also have prohibited state and local governments from introducing personal income taxes in the future. The measure was rejected by 58.12 percent of voters, meaning the millionaire tax will take effect in 2028.
Opponents of the millionaire tax made a compelling case against it, arguing that it will likely be extended to non-millionaires, too. "Not one single person we talked to believes Olympia when they say [the income tax] is not coming for them," said Brian Heywood, the founder of Let's Go Washington, the organization behind Initiative 645, at a rally in July. "They know it's coming for them."
However, fear of public spending cuts eventually outweighed fear of taxes for the Washington electorate. Activists argued that repealing the tax would "cut funding for K-12 schools, higher education and healthcare."
2. Oklahoma
Oklahoma voters rejected State Question 847, a constitutional amendment that would have tightened existing limits on annual increases in property valuations used to calculate property taxes. The proposal, which was defeated by 54.3 percent of voters, would have reduced the maximum annual increase in taxable property values from 3 percent to 1.75 percent for primary residences and agricultural land, and from 5 percent to 4 percent for other properties.
3. Wyoming
Wyoming voters rejected Initiative 1, which would have slashed taxes on some residential property by 50 percent. The measure came to the ballot with more than 30,000 signatures, but 55.1 percent of voters dismissed it.
Voters rejected the measure in part because of their fear that it would result in cuts to public services. The Vote NO on Prop 1 Coalition Chair, Kim Amen, said that voters "said loudly that critical services like our public schools, first responders, road repairs, and libraries should receive the funding they need and that Wyoming families deserve."
The state had already enacted substantial cuts to property taxes—in 2025 Wyoming introduced a 25 percent exemption on the first $1 million of a primary residence's market value—so perhaps voters did not see the need for another cut.
Although voters rejected Republican politicians at elections, it isn't clear that they embraced Democratic policies either. "Voters' tax policy preferences have proven relatively stable in a period of partisan churn," Jared Walczak, senior fellow at the Tax Foundation, tells Reason. "Voters punished Republicans at the polls, but their views on tax policy seem to remain about what we would have expected in prior elections."