Watch those state taxes...

State budgets are strained to the breaking point, and many governors and state legislatures are proposing, or have enacted, state tax hikes to avoid essential service cuts.

According to CNNMoney.com, 16 states have enacted tax increases this year, and another 17 are considering proposals.

Already this spring, Arizona and California mid-year tax hikes have caused nanny employers additional record keeping headaches. Many Arizona nannies found that while the Federal income tax rate reductions added a few extra dollars to their pay check, Arizona came by a month later and took that money back.

According to the article,

More tax increases are likely as states continue to struggle with the economic downturn, especially since state revenues usually don't recover until 12 to 18 months after the national economy turns around.

I encourage household employers to stay informed - subscribe to this blog for example - as all of the tax rate changes so far this year have occurred on very tight timelines.