Exemptions, deductions and credits built into the state’s tax code are estimated to result in $7 billion in foregone revenue this fiscal year, the State Office of Fiscal Analysis said in a recent report.
The biggest chunk of so-called “tax expenditures” comes from the sales-and-use tax category, which would result in $3.7 billion in the fiscal year that ends in June if the spending was taxed.
Sales-and-use purchases include items like food, prescription medication, motor vehicle fuel and certain utilities. It also includes about $1 billion in exemptions for nonprofits.
The second largest category of tax expenditures is the personal income tax, which includes such tax benefits as credits for property taxes paid, the earned income tax credit and social security benefits.
Gross earnings of petroleum companies rank third at $418.1 million and corporate income taxes rank fourth at $364.8 million.
For fiscal year 2015, the OFA forecasts total tax expenditures to rise to $7.1 billion.
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