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America's state governments now run on two very different tax engines: income in many coastal and professional-class states, and consumption in much of the Sun Belt and low-tax-growth belt.
Why it matters: States are not just competing over tax rates. They've built systems around which parts of the economy to tax — and which residents feel it most.
By the numbers: In 2025, 27 states got their biggest share of tax revenue from sales and gross receipts taxes, while 21 relied most heavily on income taxes — individual and corporate combined, according to an Axios analysis of new Census state tax data.
