07 November 2025 State and Local Tax Weekly for September 26 and October 3 Ernst & Young's State and Local Tax Weekly newsletter for September 26 and October 3 is now available. Prepared by Ernst & Young's State and Local Taxation group, this weekly update summarizes important news, cases, and other developments in U.S. state and local taxation. California updates general conformity date to Internal Revenue Code while continuing to decouple from significant federal provisions On October 1, 2025, the California Governor signed SB 711, which, for the first time in a decade, updates California's conformity to the Internal Revenue Code (IRC) for both corporate and individual income tax purposes. Generally, California selectively incorporated specific provisions of the IRC as of a specified date. SB 711, effective immediately, updates California's specified IRC conformity date to January 1, 2025 (from January 1, 2015). While California now conforms to many of the federal tax changes enacted since January 1, 2015, the state continues to decouple from several changes enacted by the federal Tax Cuts and Jobs Act (TCJA). California also does not conform to the changes made by the "One Big Beautiful Bill Act" (P.L. 119-21, OBBBA), as it was enacted on July 4, 2025. Conformity to select IRC provisions: Federal changes California conforms to include, but are not limited to, the following:
Before approving SB 711, the Assembly removed provisions that would have decoupled from the low-income housing tax credit minimum credit rate provision under IRC Section 42(b)(3). Thus, California will continue to conform to this provision. Decoupling/non-conformity to select IRC provisions: Federal changes California continues to decouple from under prior conformity legislation and federal changes California specifically decouples from under SB 711 include, but are not limited to, the following:
In addition, California still does not conform to health savings account treatment, modified accelerated cost recovery (MACRs) for corporations, bonus depreciation and increased IRC Section 179 expensing, opportunity zones, global intangible low-taxed income (GILTI) or foreign-derived intangible income (FDII). SB 711 also disallows deductions for excise tax imposed by (1) IRC Section 4501 related to the repurchase of corporate stock and (2) IRC Section 5000D related to designated drugs during noncompliance periods. For additional information on this development, see Tax Alert 2025-2032. Alaska: On September 27, 2025, Alaska Governor Dunleavy vetoed SB 113, which would have: (1) generally adopted Multistate Tax Compact provisions relating to the allocation and apportionment of income by updating definitional provisions, (2) adopted market-based sourcing for services and intangible property, and (3) adopted single sales factor apportionment for "highly digitized businesses." The legislature could attempt to override the governor's veto within the first five days of the convening of the second regular session in January 2026. California: New law (SB 302) excludes from a taxpayer's gross income refund payments for specified federal environmental credits and payments received by a transferor as consideration for a transfer of the value of the credits. Specifically, SB 302 adds new Cal. Rev. and Tax. Code (CRTC) Sections 17132.3 (personal income tax) and 24310.5 (corporate income tax). Under these new provisions and applicable to tax years beginning on or after January 1, 2026, and before January 1, 2031, gross income does not include the following:
Payments made under IRC Section 6418 include the value of a credit received by a transferee. When introduced, the proposed bill language stated that the provision would be applicable for tax years beginning on or after January 1, 2023. The final bill language, however, was revised to be applicable to tax years beginning on or after January 1, 2026. Cal. Laws 2025, ch. 215 (SB 302), signed by the governor on October. 1, 2025. For additional information on this development, see Tax Alert 2025-2021. Illinois: The Illinois Department of Revenue (IL DOR) adopted amendments to 86 Ill. Adm. Code 100.3405, which modify the apportionment method for investment income of financial organizations as provided by Pub. Act 103-0592. The adopted changes provide guidance on which receipts from investment assets and activities and trading assets and activities are included in the receipts factor for tax years ending before December 31, 2025, and for tax years ending on or after December 31, 2024. Additionally, adopted amendments to 86 Ill. Adm. Code 100.9710, modify the meaning of entities engaged in the business of a "savings bank" or a "savings and loan association," and update the limit for an entity engaged in business as a "small loan company" to making loans in a principal amount not exceeding $40,000 (from $25,000). The amended regulation took effect on September 12, 2025. Ill. Dept. of Rev., amendments to 86 Ill. Adm. Code 100.3405 and 100.9710 (Ill. Register, Vol. 49, Issue 39, September 26, 2025). Kansas: Legislation enacted in 2025 (SB 269) provided for future income and privilege tax rate reductions, contingent on revenue thresholds being met. The rate reductions first apply to the individual income tax until the lowest rate reaches 4%, followed by reductions to the corporate income tax surtax rate (until the combined normal and surtax rate reaches 4%) and to the privilege tax rate for banks, savings and loans and trust companies (until the combined normal and surtax rates reach 2.6%). The Director of Budget has determined that the amount of total fiscal year adjusted general revenue collections from FY 2025 are not in excess of the inflation adjusted base year revenues for FY 2025. Consequently, "the Secretary of Revenue will not calculate and published new income tax rates, and there will be no rate reduction for tax year 2026." Kan. Dept. of Rev., Notice 25-06 "Decreases of Income and Privilege Tax Rates — Contingent on Revenue" (October 2, 2025). Rhode Island: The Rhode Island Department of Revenue, Division of Taxation (RI DOT), issued guidance on the state's decoupling from the One Big Beautiful Bill Act (P.L. 119-21, OBBBA), focusing on the 2025 tax year. For business entities and individuals, the following "above the line" items that may be taken as a deduction on the taxpayer's federal return will have to be added back in determining the taxpayer's Rhode Island taxable income (businesses) or modified federal adjusted gross income (individual): (1) business interest expense deduction under IRC Section 163(j), (2) Section 174A amortization adjustments for research and development expensing, (3) depreciation of business assets under IRC Section 179(b), and (4) qualified sound recording production deduction under IRC Section 181. Rhode Island also does not allow exclusions for tip income, overtime compensation, interest on car loans for qualified vehicles. The RI DOT acknowledged the federal increase to the State and Local Tax (SALT) deduction cap to $40,000, noting that the state will continue to administer the pass-through entity tax. Rhode Island also does not conform to federal changes to qualified opportunity zone designations. The guidance describes the filing requirements for affected taxpayers, including the forms and schedules that must be submitted. (See Advisory 2025-18 for more on requirements related to IRC Section 174A.) The RI DOT noted that for tax years after 2025, the Rhode Island budget requires an advisory working group to issue a report with recommendations and option with respect to federal changes made by OBBBA. The report is due by October 31, 2025. R.I. Dept. of Rev., Div. of Taxn., ADV 2025-20 (October 2, 2025). California: New law (SB 86) extends the sales and use tax exclusion for projects approved by the California Alternative Energy and Advanced Transportation Financing Authority to January 1, 2028 (from January 1, 2026). Such projects include those that promote California-based manufacturing, high-quality California-based jobs, advanced manufacturing, reduction of greenhouse gases, reduction in air and water pollution or energy consumption and, as added by SB 86, electrical generation facilities using nuclear fusion technology. On or after January 1, 2026, if an applicant, along with its parent corporation and subsidiaries, employs 500 or more employees, the authority is prohibited from approving a project for financial assistance unless the applicant certifies that it and its contractors will do the following: (1) provide comparatively good wage and benefits to employees of the applicant or its subcontractors; (2) invest in employee training, growth and development; and (3) adopt mechanisms to include worker voice and agency in the workplace. Cal. Laws 2025, ch. 211 (SB 86), signed by the governor on October 1, 2025. Colorado: In response to a ruling request, the Colorado Department of Revenue (CO DOR) found public improvement fees (PIFs) are included in the taxable purchase price and subject to sales tax. Under Colorado law, the purchase price excludes any direct tax imposed by the federal government, any state, local or special district sales tax, and any retail delivery fee and enterprise retail delivery fee (collectively "government tax or fee"). PIFs are imposed on consumers making purchases at certain shopping complexes across the state. These PIFs are imposed by the developer or landlord of such complex to help pay for its upkeep and public infrastructure improvements (e.g., landscaping and paving). The CO DOR said that because a PIF is not a direct government tax or fee, it is included in the purchase price subject to sales tax. Colo. Dept. of Rev., GIL 25-005 (August 21, 2025). Illinois: The Illinois Department of Revenue adopted amendments to 86 Ill. Adm. Code Part 480 "Hotel Operators' Occupation Tax Act" to add guidance on the tax obligations of re-renters of hotel rooms (hereafter "re-renter") and hosting platforms. Starting July 1, 2024, if the renting, leasing or letting of a hotel room is through a re-renter, the re-renter is the hotel operator for purposes of the hotel operators' occupation tax and is liable for taxes on the rent collected on the rental. A re-renter headquartered outside of Illinois and whose only presence in the state is its remotely conducted business as a re-renter is considered the hotel operator for tax purposes if it meets one of the following: (1) it has cumulative gross receipts from Illinois rentals of $100,000 or more, or (2) it cumulatively enters into 200 or more separate transactions for rentals in Illinois. The regulation describes how to calculate whether the threshold has been met. A hotel operator that rents, leases or lets taxable rooms to a re-renter incurs the tax on the gross rental receipts it receives from the re-renter. Such hotel operator cannot claim a resale exemption. In this situation, the re-renter incurs tax on its gross rental receipts as provided above. The amended regulation includes several illustrative examples. The regulation took effect on August 27, 2025. Ill. Dept. of Rev., final amended 86 Ill. Adm. Code Part 480 (Ill. Register, Vol. 49, Issue 37, September 12, 2025). Minnesota: The Minnesota Department of Revenue (MN DOR) updated its digital products sales tax fact sheet. An update explains that sales of virtual currency are not taxable. If virtual currency is redeemed for a taxable item or service, tax is due on the value of the consideration received by the seller. The fact sheet also addresses the following topics: (1) taxable sales, including bundled transactions; (2) nontaxable sales, including webinars, online classes, textbooks and instructional materials; (3) sourcing digital products; (4) multiple points of use; (5) industrial production and capital equipment; and (6) non-fungible tokens. Minn. Dept. of Rev., Sales Tax Fact Sheet "Digital Products" (last updated September 26, 2025). Texas: In response to a ruling request from a company that sells concrete materials from three ready mix concrete plants located in different cities in the state, the Texas Comptroller of Public Accounts (Comptroller) said the company should source local sales taxes to the plant location that fulfills the order for the concrete. In so determining, the Comptroller explained that because each plant location receives three or more orders during the calendar year, each is a "place of business" under Texas Tax Code Section 321.002(a)(3)(A). The Comptroller also found that although the company manufactures concrete and delivers it to a contractor at a job site, it does not meet the statutory definition of "ready mix concrete contractor" because it does not both produce and incorporate concrete into real property. Rather, the company is a seller of materials. Tex. Comp. of Pub. Accts., Star No. 202509034L (September 5, 2025). Texas: In response to a ruling request from a taxpayer who operates a mobile application (app) that allows truck drivers to purchase discounted fuel at fuel stops the have partnered with the taxpayer, the Texas Comptroller of Public Accounts (Comptroller) said the fee the taxpayer charges the fuel stops on the total sale of discounted fuel through the taxpayer's app is taxable as the sale of data processing services. The app does not sell fuel to truck drivers who use it. Rather, the app displays the location of a fuel stop, the discounted fuel price and amenities the stop offers (e.g., showers, dining, parking). In order to receive a discounted fuel price, the truck driver must download the app (the app is free) and show the code generated by the app to the fuel stop clerk, confirming the truck driver's purchase through the app. The app also produces a report on transactions made through the app for fuel stops. The Comptroller found that these functions of the app "involve data compilation, data manipulation, and information storage which fall under the definition of data processing … ." Further, the exclusion from data processing services for the settling of an electronic payment transaction by certain payment processors or financial institutions under Texas Tax Code Section 151.0035(b)(3) does not apply because the taxpayer's agreement with the fuel stops establishes that the taxpayer is not a money transmitter, payment instrument seller or money services business. Tex. Comp. of Pub. Accts., Star No. 202508025L (August 22, 2025). Washington: The Washington Department of Revenue (WA DOR) issued a Special Notice, explaining that starting January 1, 2026, gross income from sales of precious metal bullion and monetized bullion to end consumers are subject to the business and occupation (B&O) tax under the Retailing classification and sales tax. Gross income from sales to resellers are subject to the B&O tax under the Wholesaling classification when the buyer provides a valid reseller permit; sales tax does not apply to wholesale sales. The WA DOR noted that as of January 1, 2026, precious metal bullion and monetized bullion are no longer excluded from the definition of a wholesale or retail sale. Wash. Dept. of Rev., Special Notice: "Sales of precious metal bullion and monetized bullion now subject to B&O tax and retail sales tax" (September 24, 2025). Federal: The IRS released the 2025 inflation adjustment factor and reference prices for calculating the IRC Section 45Y clean electricity production tax credit (PTC) that applies to the sales, consumption or storage of electricity produced in the United States or a possession at a qualified facility under IRC Section 45Y(c)(1). The inflation adjustment factor for calendar year 2025 for purposes of IRC Section 45Y(c)(1) is 1.9971. In May 2025, the IRS released earlier guidance with inflation adjustment factors generally for calculating 2025 IRC Section 45 credits with the same factor of 1.9971 (see Tax Alert 2025-1160). For facilities placed in service on or after January 1, 2022, the PTC for the sales, consumption, or storage of electricity is 0.6 cents per kilowatt hour on the sale of electricity from all eligible technologies (3 cents if prevailing wage and apprenticeship requirements are met). The inflation adjustment factor for calendar-year 2025 is 1.9971. For additional information on this development, see Tax Alert 2025-2006. Federal: On September 30, 2025, the Treasury Department and IRS released guidance (Notice 2025-50 (Notice)) on changes made to Qualified Opportunity Zones (QOZs) by the "One Big Beautiful Bill Act" (OBBBA) concerning the definition of rural areas and the new substantial improvement requirements for rural areas under IRC Section 1400Z-2(d)(2)(D)(ii). The new provisions apply as of July 4, 2025. The OBBBA reinvented the Opportunity Zone regime to create rolling, 10-year QOZ designations for census tracts, with the first determination period beginning on July 1, 2026, and the new census tracts designations going into effect on January 1, 2027 (see Tax Alert 2025-1418). The OBBBA codified the definition of "rural area" in IRC Section 1400Z2(b)(2)(C)(ii) applicable to amounts invested in Qualified Opportunity Funds (QOFs), after December 31, 2026. A "rural area" is defined as "any area other than — (I) a city or town that has a population of greater than 50,000 inhabitants, and (II) any urbanized area contiguous and adjacent to a city or town described in subclause (I)." The OBBBA also introduced two new benefits for QOZs located in rural areas. First, it modified the substantial improvement requirements so that tangible property located entirely in a rural area would be considered substantially improved if its improvement costs equaled up to 50% of its adjusted basis (rather than 100% for tangible property located outside a rural area). Second, Qualified Rural Opportunity Funds (QROFs) receive a step-up in basis equal to 30% on capital gains deferred into a QROF after five years (as compared to 10% for non-QROFs). The Notice defines rural areas for purposes of applying the substantial improvement test for 2018 QOZs. The Notice maintains the definition of a "rural area" in the OBBBA and further clarifies, for purposes of this definition, that (1) the 2020 Decennial Census applies, (2) "urbanized area" is any area that is designated by the Census Bureau as an urban area, and (3) "contiguous and adjacent" means any areas that share a common boundary or at least one common point. Under this definition, the Treasury and the IRS have determined that 3,309 QOZ census tracts qualify as "rural areas," which are listed in the Appendix to the Notice. The Notice applies to all tangible property located in 2018 QOZs that consist entirely of a rural area that has been, or is in the process of being, substantially improved. The Notice applies for any determination made on or after July 4, 2025. For additional information on this development, see Tax Alert 2025-2020. District of Columbia: New law (B26-0053) creates the vacant and blighted property rehabilitation credit. Effective for tax years beginning after December 31, 2026, the credit may be claimed against corporate and individual income taxes. The amount of credit is equal to 50% of eligible development costs that have been certified by the Mayor; the aggregate amount of credit that can be approved by the Mayor is capped at $2 million each fiscal year. The amount of credit that exceeds that taxpayer's liability is refundable to the taxpayer. The law defines "eligible development costs" as "amounts paid or incurred by an eligible taxpayer after December 31, 2026, for the acquisition, construction, substantial rehabilitation, demolition of structures located on, or environmental remediation of an eligible property." The law defines "eligible property" as Class 3 or 4 property that is registered or designated as vacant or blighted vacant and that is a house with four or fewer units or a condominium unit and that is located in a qualifying census tract. D.C. Laws 2025, L26-0041 (B26-0053), became law on October 1, 2025. California: New law (AB 985) requires the reassessment of each property located within a five-mile radius of the center of the Chiquita Canyon Landfill in Los Angeles County. The reassessment is retroactive to the January 1, 2022 lien date and the reassessment must be such that the full cash value base of the property reflects any decline in the property's value arising from the Chiquita Canyon elevated temperature landfill event. The assessor must notify the taxpayer of the change in the assessed value of the property. The notice must include the amount of the change in the assessment value and, if the property taxes were paid at the higher assessment value, that a refund claim may be filed with the auditor-controller. AB 985 also modifies various provisions related to installment payment plans with regard to payments related to property within a five-mile radius of this landfill event. AB 985 took effect immediately. Cal. Laws 2025, ch. 174 (AB 985), signed by the governor on October 1, 2025. District of Columbia: New law (B26-0053) modifies the real property tax rates and the special real property tax rates for Class 3 properties designated as vacant and Class 4 properties designated as blighted vacant, with the rates increasing in the second, the third, and the fourth and any subsequent years of such designation. The rate increases apply to such designated property for the tax year beginning October 1, 2027, and each tax year thereafter. The law also provides for the tax abatement for the redevelopment of vacant and blighted commercial properties. The Mayor may approve an abatement of tax for an eligible property if it meets certain criteria, including, but not limited to, the eligible development costs exceed $1.5 million and the property owner (or designee/assignees) demonstrates that the abatement will materially assist the redevelopment project and that the project would not go forward without the abatement. For each property for which an abatement certificate has been issued, the real property tax will be abated as follows: (1) half of the tax otherwise due in each of the first six years following the year in which the abatement certificate was issued; (2) two-thirds of the applicable tax in each of the seventh and eighth tax years following the year in which the abatement certificate was issued; and (3) three-quarters of the applicable tax in each of the ninth and tenth tax years following the year in which the abatement certificate was issued. The Mayor may abate up to $2.5 million in taxes in fiscal years 2027, 2028 and 2029, increased to $3 million for each succeeding fiscal year thereafter. D.C. Laws 2025, L26-0041 (B26-0053), became law on October 1, 2025. Washington: The Washington Department of Revenue issued a special notice on the new real estate excise tax (REET) exemption for the sale of qualified spaces in an affordable housing development to a nonprofit organization, housing authority or public corporation for community use. The exemption is available starting on January 1, 2026. To qualify for the exemption, all of the following must be met: (1) the development must qualify for an exemption from real and personal property taxes under one of the specified statutory provisions; (2) a qualified space must be sold; (3) the space must be used for an exempt community purpose; (4) the real property sold must be a separate legal parcel; (5) the buyer must be a nonprofit organization, a housing authority or a public corporation; and (6) a REET affidavit must be completed for each transfer of real property (certain reference must be made in the affidavit). Wash. Dept. of Rev., Special Notice: "Real estate excise tax (REET) exemption for the sale of space in an affordable housing development for community use" (October 1, 2025). Colorado: The Colorado Department of Revenue announced that on November 13, 2025, it will hold a workgroup meeting to solicit public comments on proposed new rules and amendments to certain rules regarding mandatory electronic filing and payment of certain taxes and fees. Proposed amendments would be made to Colo. Rule 39-21-119.5-1 "Requirements for electronic filing and electronic payment" and new rules would be promulgated for the following: (1) Rule 39-21-119.5-2 "mandatory electronic filing of the retail sales tax return;" (2) Rule 39-21-119.5-3 "mandatory electronic filing of the aviation fuel sales tax return;" (3) Rule 39-21-119.5-4 "mandatory electronic filing and payment of the daily vehicle rental fee and congestion impact fee;" (4) Rule 39-21-119.5-5 "mandatory electronic filing and payment of the public utilities administration fee;" (5) Rule 39-21-119.5-6 "mandatory electronic filing and payment of the motor fuel tax;" (6) Rule 39-21-119.5-7 "mandatory electronic filing and payment of alcohol beverages excise tax;" (7) Rule 39-21-119.5-8 "mandatory electronic filing and payment of alcohol beverages excise tax by winery direct shipper permit holders;" (8) Rule 39-21-119.5-9 "mandatory electronic filing of oil and gas severance tax withholding statements;" (9) Rule 39-21-119.5-10 "mandatory electronic filing and payment of the county lodging tax;" and (10) Rule 39-21-119.5-11 "mandatory electronic filing and payment of the local marketing and promotion tax." Additional information on the meeting, as well as links to the proposed rules and amendments, is available here. Illinois — Reminder: The time-limited general tax amnesty program and the franchise tax amnesty program will both end on November 17, 2025. The general tax amnesty applies to taxes administered by the Illinois Department of Revenue (e.g., income tax, sales/use tax) that were due for any tax period ending after June 30, 2018, and before July 1, 2024. The Department will waive all interest and penalties otherwise due and will not seek civil or criminal prosecution of those who participate in, and comply with the terms of, the amnesty program. The franchise tax amnesty program, which is being administered by the Illinois Secretary of State, applies to all taxpayers owing a franchise tax or license fee imposed under Art. XV of the Business Corporation Act of 1983 (Art. XV) for any tax period ending after June 30, 2019, and on or before June 30, 2025. In exchange for participating in the franchise tax amnesty program and paying all franchise tax liabilities due, the Secretary will waive applicable penalties and interest and will not pursue civil or criminal prosecution for the time period that amnesty has been granted. For additional information on these amnesty programs, see Tax Alert 2025-1928 (general tax amnesty) and Tax Alert 2025-1926 (franchise tax amnesty). Multistate: The September 2025 edition of the Payroll Month in Review, which summarizes the latest employment tax and other payroll developments, is now available. The September edition highlights developments in US federal, state and local payroll and human resources matters as well as our insights to improve US employment tax and payroll compliance. This month's publication features the insight "Consideration of state law differences when reporting overtime pay eligible for deduction under the OBBBA." The September edition is available via Tax Alert 2025-2038. Washington: The Washington Department of Revenue issued a Special Notice on the new luxury motor vehicle tax, which applies starting January 1, 2026. The new 8% tax is imposed on the amount of the selling price of a motor vehicle, and the fair market value of a leased vehicle, that exceeds $100,000. For the purchase of a new motor vehicle, the taxable amount is the selling price plus the vehicle trade-in minus the $100,000 deduction. The tax calculated on a leased vehicle is the fair market value of the vehicle at the beginning of the lease minus the $100,000 deduction. The deduction for the exempt portion of the selling price is increased by 2% on July 1 of each year. The notice lists vehicles exempt from the luxury motor vehicle tax. Wash. Dept. of Rev., Special Notice: "New luxury motor vehicle tax" (September 29, 2025). Washington: The Washington Department of Revenue (WA DOR) issued a Special Notice on 0.5% surcharge on high grossing businesses, which starting January 1, 2026, is imposed on businesses with Washington taxable income greater than $250 million or more in a calendar year. The surcharge expires on December 31, 2029. The notice list amounts that are exempt from the surcharge and excluded from the calculation of income subject to surcharge. Such amounts include, but are not limited to, income subject to the financial institution surcharge; income subject to any manufacturing business and occupation (B&O) tax classification; retail sales of prescription drugs; and income for which the multiple activities credit is allowed. The surcharge is in addition to the B&O tax. Wash. Dept. of Rev., Special Notice: "Surcharge on high grossing businesses" (September 29, 2025). Federal: On September 29, 2025, United States (US) President Donald J. Trump issued a Proclamation Adjusting Imports of Timber, Lumber, and Their Derivative Products into the United States (Proclamation). This action follows a report from the US Secretary of Commerce, which concluded that current import levels of wood products threaten to impair US national security. The Proclamation outlines the Secretary's findings regarding the impact of wood product imports on domestic industry and national security, emphasizing the need for protective measures. For additional information on this development, see Tax Alert 2025-1963. Federal: A handful of significant United States (US) Trade developments emerged the week of September 22-26, 2025. In a notice issued on September 25, the Department of Commerce's Bureau of Industry and Security (BIS) announced Section 232 investigations into imports of robotics and industrial machinery. Separately, BIS also issued a notice regarding Section 232 investigations into personal protective equipment and medical equipment. These investigations aim to assess the impact of these imports on US national security and consider potential trade measures, including tariffs. In a September 25, 2025 TRUTH Social post, President Trump announced new tariff policies on pharmaceutical products, kitchen cabinets, bathroom vanities, heavy trucks and upholstered furniture. Also on September 25, the US Federal Circuit upheld the legality of the Section 301 Lists 3 and 4A tariffs in HMTX Industries LLC, et al. v. United States, confirming the USTR's authority under Section 301 to modify tariffs. On September 23, US Customs and Border Protection updated filing guidance for replacement duties on imports from the European Union (EU), Japan and the United Kingdom. Finally, in a Federal Register notice published on September 25, the International Trade Administration, US Department of Commerce and the Office of the United States Trade Representative outlined the implementation of certain tariff-related elements of the US-EU Framework Agreement. For additional information on this development, see Tax Alert 2025-1948. International — Turkiye: Presidential Decrees no. 10435 and 10436, published in the Official Gazette dated September 22, 2025, along with Decree no. 33025, introduce some critical amendments in relation to import duties applied on various US-origin products and motor cars regardless of their origin. Specifically, Turkiye announced the removal of additional tariffs on various US-origin goods, including a 60% tariff on passenger vehicles, effective from September 22, 2025. Also effective from that date, new blanket tariffs for motor cars based on engine type will be implemented, with rates set at: 25% (not less than US$6,000) for conventional and hybrid (excluding plug-in hybrid) vehicles; 30% (not less than US$7,000) for plug-in vehicles; and 30% (not less than US$8,500) for electric vehicles. As stipulated in the provisional article in the Decree, these new additional financial liabilities will not be charged during importation if the goods are cleared within two months from September 22, 2025. For additional information on this development, see Tax Alert 2025-1957. Because the matters covered herein are complicated, State and Local Tax Weekly should not be regarded as offering a complete explanation and should not be used for making decisions. Any decision concerning matters covered herein should be reviewed with a qualified tax advisor. Document ID: 2025-2255 |
