White House CEA projects 1–1.6% GDP gain per state from eliminating state income tax

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The Council of Economic Advisers' (CEA) published analysis reports an average-state GDP increase of 1 to 1.6 percent under the modeled income-tax phase-out scenarios.

Source summary

A White House (CEA) research paper examines the economic effects and feasibility of states phasing out personal income taxes. It models two scenarios—full revenue replacement through broadening the sales tax, and replacement combined with limits on spending growth—and reports state-by-state impacts on GDP, wages, startup formation, and high-income migration. The CEA finds average gains such as a 1–1.6% rise in state GDP, 16–19% more startups, a $4,000 increase in average wages, and estimated average state sales tax requirements of under 8% (or 6.2% with spending limits).

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Latest fact check

The Council of Economic Advisers (CEA) analysis published on the White House website on Jan. 28, 2026, lists as a key finding “A 1 to 1.6 percent increase in the level of GDP for the average state” from phasing out state personal income taxes; the downloadable CEA PDF includes the identical numeric range and wording. The statement accurately quotes the CEA report’s headline quantitative result. Verdict: True — the CEA analysis itself reports a 1.0–1.6% average-state GDP increase, so the claim correctly reflects the report’s finding.

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Timeline

Update · Jan 29, 2026, 01:46 AMTrue
The Council of Economic Advisers (CEA) analysis published on the White House website on Jan. 28, 2026, lists as a key finding “A 1 to 1.6 percent increase in the level of GDP for the average state” from phasing out state personal income taxes; the downloadable CEA PDF includes the identical numeric range and wording. The statement accurately quotes the CEA report’s headline quantitative result. Verdict: True — the CEA analysis itself reports a 1.0–1.6% average-state GDP increase, so the claim correctly reflects the report’s finding.
- https://www.whitehouse.gov/research/2026/01/the-economic-impact-of-state-income-tax-elimination/
- https://www.whitehouse.gov/wp-content/uploads/2026/01/The-Economic-Impact-of-State-Income-Tax-Elimination.pdf
Original article · Jan 28, 2026
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