April 6, 2000 -- Because the federal income tax is the biggest and usually the first tax we see listed on our pay stubs, we naturally tend to focus on it.

But state government takes a bite out of our spending money, too. Bankrate will help you stay on top of what your localities are collecting -- income, sales, personal property or investment taxes, or often a combination of all.

Here's a look at some recent tax actions across the nation.

New Jersey veterans' deduction increased
TRENTON -- After 37 years, veterans who own property in New Jersey are getting the bigger property tax break they have sought.

Since 1963, veterans have been allowed a $50 annual deduction against property taxes. But the deduction has remained the same while most property values -- and corresponding taxes -- have risen.

New Jersey voters approved a constitutional amendment last November to increase the annual property tax deduction for veterans. Gov. Christine Todd Whitman made it official on March 30 when she signed enactment legislation into law. This year the deduction will increase to $100 and will go up another $50 each year until it reaches $250 in 2003.

Veterans who were in active service in any Armed Forces branch during a war or other emergency are eligible for the deduction if they were honorably discharged. If a service member was killed while on active duty, his or her spouse can take the deduction.

State officials say approximately 700,000 veterans will benefit from the increased deduction. The tax break is expected to cost New Jersey about $18 million in the next fiscal year, which begins July 1.

Michigan taxpayers get new cuts
LANSING -- April may be federal tax month, but for Michigan residents it began with several new state tax breaks.

The most anticipated tax cut is the acceleration of the state's already planned income tax rate reduction. Michigan earners now will pay 4.2 percent tax on state income, down from 4.3 percent last year.

Many parents also will get a tax break by claiming an exemption of $600 for each dependent child younger than 19. Previously, the child had to be age six or younger for the $600 claim, with children ages seven through 12 providing parents only a $300 exemption each.

The state's definition of dependent also was amended to agree with federal tax law.

And Michigan residents 65 and older now can claim additional tax credit for property taxes that exceed 3.5 percent of their incomes. The credit goes from 60 percent to 100 percent of the excess.

The cuts are expected to save Michigan taxpayers $167.4 million in fiscal year 2000 and $94.9 million in 2001, according to state treasury estimates.

"The continued emphasis on business tax cuts that we saw in 1999 is hard to justify, considering how low Texas ranks in its state-local tax burden," said Eva DeLuna-Castro, an analyst with the Center for Public Policy Priorities.

The Center has released a study showing Texas' use of public money to attract businesses to the state or assist existing firms is growing three times faster than the state budget: It cited:

• $2.8 billion in tax incentives enacted before the 2000 legislative session
• $950 million approved by the legislature in 1999
• $729 million for economic development programs in 2000 and 2001

Pro-business groups, however, say the Center's study incorrectly characterizes actions like sales tax exemptions as economic-development tax breaks. Other state business defenders add that the recent tax breaks target areas with higher unemployment rates and lower per-capita income and require companies to create jobs and provide employee benefits.

State lawmakers say they will look at where Texas' business tax policy can be improved, and House Speaker Pete Laney has named a special committee to look at promoting economic development in rural Texas.