Data Show Changes in Sources of State Tax Revenue Over 123 Years
The nation has completed another tax season and millions of U.S. taxpayers filed returns, tallied up their income, sales, property and capital gains taxes among many others.
Have there always been so many taxes?
In a word – no. At least, not at the turn of the last century. But things have changed drastically since then.
The Great Depression and World War II also brought about major tax changes. Property values declined significantly following the 1929 market crash, diminishing the importance of property taxes at the state level.
When the U.S. Census Bureau began collecting government finance data in 1902, there were no state sales taxes on general sales, tobacco, motor fuel or alcohol.
Fast forward 123 years to 2025, when every state collected some form of general or selective sales and gross receipt taxes, accounting for the largest portion – 45.4% – of tax revenue nationally.
At the beginning of the 20th century, there were no state income taxes because they were too difficult to administer. In 2025, 44 states collected personal income taxes, by then the nation’s second-largest source of tax revenue (33.7%).
Tax Revenue Evolution
The nation’s tax structure has changed significantly since the Census Bureau began tracking it in 1902.
Property taxes’ share of revenue plummeted, sales tax grew and income tax was introduced. Another key difference: the diminished share of license taxes.
In 1927, for example, license taxes accounted for their largest historical share (28.9%) of the national total state tax revenue, compared to just 4.7% in 2025.
Though license taxes are still collected, corporate income and other types of taxes perform the function of capturing revenue from businesses.
New Taxes
In 1911, Wisconsin became the first state to impose income taxes — both personal and corporate. Hawaii had an income tax in 1901 but was not yet a state.
Oregon had the nation’s first gasoline tax (levied in 1919) and states began taxing cigarettes after Iowa introduced the first selective sales tax on tobacco in 1921.
The Great Depression and World War II also brought about major tax changes. Property values declined significantly following the 1929 market crash, diminishing the importance of property taxes at the state level.
As states began to look for new revenue sources, they turned to general sales taxes. Mississippi led the way, imposing the nation’s first one in 1932.
By the end of the 1930s, 24 other states had followed suit.
After Prohibition officially ended in December 1933, 29 states started structuring alcohol taxes as sales excise taxes rather than rely as heavily on license taxes.
In the 1980s, tax adoption slowed, stabilizing the types of tax revenue being collected.
More recently, there have been shifts in personal and corporate income taxes and in sales taxes, common during periods of economic shock like the dot-com bubble (the late-1990s tech crash), the 2008 financial crisis and the COVID-19 pandemic.
About the Data
Explore the Annual Survey of State Government Tax Collections data from our most recent 2025 release to find data dating back to 1902 using our historic dataset.
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