29 May 2026 State and Local Tax Weekly for May 15 and May 29 Ernst & Young's State and Local Tax Weekly newsletter for May 15 and May 29 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. New York budget bill extends corporate franchise tax rates, addresses certain OBBBA provisions and creates a pied-à-terre tax, among other changes On May 28, 2026, New York Governor Kathy Hochul signed into law the 2026–2027 New York State (NYS) budget bills (A.10009-C and S.9009-C, hereafter, Budget Bill).
For an in-depth discussion of these changes, see Tax Alert 2026-1238. Minnesota updates IRC conformity, addresses certain OBBBA provisions, and extends elective pass-through entity tax Minnesota Governor Tim Walz on May 27, 2026, signed into law HF 2438, Minnesota's tax omnibus bill. Key income tax provisions do the following. IRC conformity: HF 2438 updates Minnesota's IRC conformity date from May 1, 2023, to May 1, 2026. The change is effective the day following final enactment of HF 2438, except that the changes in federal law are effective retroactively at the same time the changes were effective for federal purposes. Domestic research and experimentation expenditures: For corporate taxpayers, HF 2438 decouples from IRC Section 174A's immediate expensing of domestic research and experimentation (R&E) costs and requires 80% of the amount claimed for federal purposes to be added back to federal taxable income. HF 2438 allows taxpayers a ratable subtraction of the amount added back over the following four years, similar to how Minnesota treats bonus depreciation. This provision is effective retroactively to tax years beginning after December 31, 2024. Corporate taxpayers that make the "small business" election under Section 70302(f)(1) of the OBBBA must add back to federal taxable income 80% of the amount of any deduction claimed retroactively for a tax year. A ratable subtraction of the amount added back is allowed over the following four years. The addback provision is effective retroactively to tax years beginning after December 31, 2021, with the subtraction adjustment effective for tax years beginning after December 31, 2022. For corporate taxpayers making an election to deduct unamortized amounts incurred in tax years beginning before January 1, 2025, under Sections 70302(f)(2)(A)(i) or (ii) of the OBBBA, the amount of the deduction claimed for unamortized amounts is added back to federal taxable income. For the tax year in which an addition is required, and for each of the immediately following tax years, an amount equal to the amortized amount is allowed as a subtraction. The "amortized amount" is defined as "the amount of the deduction allowed for an expenditure in a [tax] year under IRC Section 174A if the taxpayer did not make the election under Sections (f)(2)(A)(i) or (ii) of the OBBBA." This provision is effective retroactively to tax years beginning after December 31, 2024. Net Controlled Foreign Corporation Income: HF 2438 amends Minn. Stat. 290.21, subd. 10 to reference net controlled foreign corporation income (NCTI), instead of global intangible low-taxed income (GILTI), and to provide that NCTI computed under new Minn. Stat. 290.034 is dividend income subject to Minnesota's 50% dividends received deduction. For purposes of this deduction, Minnesota adopts its own definition of NCTI. New Minn. Stat. 290.034 and 290.035 require "Minnesota NCTI" be computed as follows:
Further, HF 2438 amends Minn. Stat. 290.0134 to create a subtraction adjustment for the amount calculated under new Minn. Stat. 290.034(a)(2). The subtraction adjustment cannot exceed the amount of NCTI computed under new Minn. Stat. 290.034. Subpart F income: For corporate tax purposes, HF 2438 determines subpart F income without regard to the OBBBA's permanent extension of the look-through rule and treats that income as dividend income subject to Minnesota's 50% dividend received deduction. Opportunity Zone capital gain income: Beginning with tax year 2027, HF 2438 requires corporate taxpayers to add opportunity zone capital gain income to federal taxable income. The addition is the sum of the amount of capital gain deferred under IRC Section 1400Z-2(a) and the amount by which the taxpayer's basis in the investment was increased by IRC Section 1400Z-2(b)(2)(B) or (c). HF 2438 allows a subtraction adjustment in the year the gain is recognized federally to avoid double taxation. Pass-through entity tax (PTET): HF 2438 extends Minnesota's elective PTET for tax years 2026 and 2027. The PTET expires for tax years beginning after December 31, 2027. Effective for tax year 2026 only, HF 2438 will not impose a tax penalty for failing to make estimated payments due to the retroactive reinstatement of the PTET. For additional information on the income tax changes in HF 2438, see Tax Alert 2026-1193. Colorado: New law (HB26-1289) (enacted June 3, 2026) make changes to corporation income tax provisions, among other taxes and tax credit provisions. Corporate tax change made by HB26-1289 are described below. Combined reporting — mandatory worldwide reporting with water's edge election: Colorado recently moved to a traditional combined reporting methodology beginning in 2026 (see Tax Alert 2024-0986). HB26-1289 makes worldwide combined reporting the default filing methodology for tax years beginning on or after January 1, 2027, with the option to make a water's edge election. Taxpayers make the water's edge election on a timely filed original return. Once made, the election is binding for 10 years. Upon expiration of the 10-year period, the combined group can withdraw the election on a timely-filed original return for the first tax year after the end of the 10-year binding period. If not withdrawn, the election is binding for a new 10-year period. If withdrawn, the withdrawal is binding for 10 years. Withdrawals of a water's edge election, or reinstatements of a withdrawn water's edge election, within the 10-year binding periods is possible upon a showing of reasonable cause based on extraordinary hardship due to unforeseen changes in state tax laws or policies. The water's-edge group includes all domestic members of the affiliated group, including domestic 80/20 corporations, foreign corporations if they have at least 20% of their property and payroll in the United States, domestic international sales corporations, export trade corporations and corporations incorporated in tax-haven jurisdictions (see Tax Alert 2025-1788). The new law eliminates dividends, subpart F income and net controlled foreign corporation tested income between members of the combined group. The water's edge return includes income and apportionment factors of other otherwise excludable affiliates to a limited extent. The new rules bring in effectively connected income (and related factors) of excluded members. Another provision of the law disallows deductions taken by includable affiliates for amounts paid to excludable affiliates for services and intangibles. Tax havens: Colorado uses a listed jurisdiction approach in its tax-haven rules. Starting in tax year 2027, HB26-1289 removes Lichtenstein from Colorado's list of tax havens and requires the Department of Revenue to periodically evaluate whether each of the listed jurisdictions should remain on the list. Computation of corporate net income: HB26-1289 also modifies the computation of corporate net income for tax years beginning on or after January 1, 2027, by: (1) repealing the deduction for wages and salary expenses that are not deductible in the calculation of federal taxable income pursuant to IRC Section 280C, and (2) requiring taxpayers to add back to their federal taxable income any capital gain or appreciation related to an opportunity fund otherwise excluded from federal gross income that is not from an investment in a Colorado Qualified Opportunity Fund. Colo. Laws 2026, ch. 364 (HB26-1280), signed by the governor on June 3, 2026. For more on these changes, see Tax Alert 2026-1129. Connecticut: New law (SB 1) decouples from select provisions of the One Big Beautiful Bill Act (OBBBA). For income tax years beginning on or after January 1, 2026, the state decouples from bonus depreciation for qualified production property allowed under IRC Section 168(n). (Connecticut continues to decouple from bonus depreciation allowed under IRC Section 168(k).) Connecticut also decouples from the OBBBA's change related to the deduction for domestic research and experimental (R&E) expenditures as follows:
Connecticut adopts IRC Section 174 as that provision existed on July 3, 2025, for R&E expenditures paid or incurred on or after January 1, 2023, and before January 1, 2026. The law requires the tax commissioner waive interest and penalties on estimated tax underpayments for any additional tax due as a result of the above changes, provided that the taxpayer pays the additional tax due by the later of November 15, 2026, or the due date (without regard to any filing extension) of the return on which the tax is reported. Conn. Laws 2026, Pub. Act 26-68 (SB 1), signed by the governor on May 26, 2026. Hawaii: New law (HB 2329) updates Hawaii's date of conformity to the Internal Revenue Code (IRC) to December 31, 2025 (from December 31, 2024), effective for all tax years beginning after December 31, 2025. Hawaii law decouples from several federal tax changes made by the One Big Beautiful Bill Act (OBBBA). Notably, Hawaii decouples from IRC Section 174A regarding domestic research or experimental (R&E) expenditures, and IRC Section 174 with respect to amortization of R&E expenditures. Hawaii adopts IRC Section 174 as that provision existed on December 31, 2024. The law also decouples from bonus depreciation for qualified production property under IRC Section 168(n). (The state continues to decouple from bonus depreciation under IRC Section 168(k).) Hawaii decouples from the OBBBA's changes to the qualified small business stock exclusion under IRC Section 1202; instead adopting this code section as it existed on December 31, 2024. Other OBBBA provisions that Hawaii decouples from include: (1) IRC Section 139L — interest on loans secured by rural or agricultural real property; (2) IRC Section 225 — deduction for qualified overtime compensation; (3) IRC Section 1062 — gain from the sale or exchange of qualified farmland property to qualified farmers; and (4) IRC Section 163(h)(4) — deduction for qualified passenger vehicle interest. HB 2329 took effect immediately, with the above changes applying to tax years beginning after December 31, 2025. Haw. Laws 2026, Act 35 (HB 2329), signed by the governor on May 26, 2026. Hawaii: New law (HB 3125) modifies individual income tax rates, adjusting the rates and brackets for tax years beginning after December 31, 2026. Notably, the law imposes a new 13% tax rate on taxable income over $1 million for married filing jointly, income over $750,000 for head of household filers, and income over $500,000 for single filers and married filing separately. Thus, starting in 2027, the revised rates range from 1.40% up to 13%. Haw. Laws 2026, Act 24 (HB 3125), signed by the governor on May 21, 2026. Iowa: New law (SF 2492) creates a corporate income tax deduction for net controlled foreign corporation tested income (NCTI). Specifically, the law change removes the reference to global intangible low-taxed income (GILTI) from the subtraction under Iowa Code Section 422.35(12). As revised the subtraction is available to income included under IRC Section 951A (NCTI). This change is retroactively applicable to tax years beginning on or after January 1, 2026. Iowa Laws 2026, SF 2492, signed by the governor on May 15, 2026. Colorado: New law (HB26-1223) limits the sales and use tax exemption for downloaded computer software. Effective January 1, 2027, the software exemption will apply only to such computer software that is either governed by a negotiable license agreement or developed for use by a particular user. The law defines a "negotiable license agreement" as a "written agreement or contract that is individually bargained between the licensor and licensee and that is signed in writing by authorized representatives of both the licensor and licensee prior to or contemporaneous with the licensee's access to or use of the software." Further, the law provides that an "'individually bargained between the licensor and licensee' specifically excludes a standard, form, or boilerplate agreement that is offered by the licensor on a nonnegotiable or substantially nonnegotiable basis to multiple licensees … " The law modifies various computer software related definitions, redefining computer software as "a set of coded instructions that are both designed to cause a computer or other electronic device to perform a task and are delivered by any means, including compact disc, download, or remote access through the internet." It also makes clear that computer software includes applications installed on cellular phones, tablets or other mobile devices. These provisions take effect January 1, 2027. Colo. Laws 2026, ch. 379 (HB26-1223), signed by the governor on June 4, 2026. Connecticut: New law (SB 1) expands the sales tax holiday week by increasing the exemption amount to $300 (from $100) and adding backpacks and cleated shoes. SB 1 took effect from passage. SB 1 also exempts from sales and use tax sales of nonelectronic school supplies, such as backpacks, lunchboxes, notebooks, pens and pencils, crayons, rulers and paper. The exemption applies to sales occurring on or after July 1, 2026. Conn. Laws 2026, Pub. Act 26-68 (SB 1), signed by the governor on May 26, 2026. Georgia: New law (HB 1112) provides rules for rounding cash transactions. The law provides that when the purchaser uses legal tender (i.e., US coins and currencies), an in-state merchant will determine the price of goods and services in the following manner: (1) the price of goods and services is totaled, including sales tax and any other applicable tax, and (2) if the resulting total ends in one, two, six or seven cents the total is rounded down to the nearest five cents, and rounding up to the nearest five cents if the total ends in three, four, eight or nine cents. The law states that rounding adjustments "shall not be interpreted as impacting the sales price of the purchase … or the calculation of any other tax." These rules do not apply to transaction where payment is made using any demand or negotiable instrument, electronic funds transfer, money order, credit or debit card, gift card, electronic payment, and other like instruments or mixed tender, unless cash is disbursed to the purchaser. HB 1112 takes effect on July 1, 2026. Ga. Laws 2026, Act 445 (HB 1112), signed by the governor on May 11, 2026. Hawaii: New law (HB 1688), in response to a judicial ruling regarding the state's general excise tax exemption for aircraft servicing and maintenance, provides a general excise tax emption for the sale of material, parts, or tools to an air carrier if such items are purchased for aircraft service and maintenance or for the construction of an aircraft service and maintenance facility. HB 1688 takes effect on January 1, 2027. Haw. Laws 2026, Act 20 (HB 1688), signed by the governor on May 19, 2026. South Carolina: New law (HB 5093) excludes the following from sales tax amounts paid for contracts for services entered into by the State or local governments for Emergency Services IP Network, which supports the state's Next Generation 911. The law also amends S.C. Code Section 12-36-2120(79) related to certain sales tax exemption for data centers to provide that the term "taxpayer" includes a person who bears a relationship to the taxpayer as described in IRC Section 267(b) (e.g., corporate members of the same controlled group, corporations and partnerships owned by the same person). HB 5093 takes effect on July 1, 2026. S.C. Laws 2026, Act No. 240 (HB 5093), signed by the governor May 19, 2026. South Carolina: New law (HB 5122) exempts from sales tax certain items sold to or used by internet access service providers and communications service providers. Specifically, the sales tax exemption applies to "[a]ll supplies, technical equipment, machinery, and electricity sold to internet access service providers and communications services providers, for use in producing, broadcasting, or distributing internet access service, communication services, or any combination thereof … " Internet access service providers and communications service providers must apply to the South Carolina Department of Revenue (SC DOR) for a refund of state and local sales and use tax paid on such exempt items. The refund claim must be filed by January 31 for the prior calendar year. The total amount of state and local tax that can be refunded is capped at $10 million each year. If the amount of refunds requested exceeds the limit, the SC DOR will issue pro-rata refunds. Data centers are prohibited from claiming or utilizing these exemptions or refunds. HB 5122 applies to tax years beginning after 2025. S.C. Laws 2026, Act 242 (HB 5122), signed by the governor on May 19, 2026. Tennessee: New law (SB 2166/HB 2502) imposes sales tax on the service of transmitting money from a location originating in Tennessee to a location outside the United States or its territories by an entity licensed under the Tennessee Money Transmission Modernization Act. The rate of the tax imposed is $10 per transaction. If the transmission amount exceeds $500, an addition tax will be imposed at a rate of 2% of the amount transferred in excess of $500. The service of transmitting money is not subject to local options tax. The transmission of money by any corporation defined as a financial institution is exempt from the tax, unless the financial institution is also licensed under the Tennessee Money Transmission Modernization Act. The law defines "originating in this state" and provides guidance on determining whether money is transmitted to a location outside the United States. Tenn. Laws 2026, ch. 1035 (SB 2166/HB 2502), signed by the governor on May 21, 2026; see also Tenn. Dept. of Rev., Sales and Use Tax Noice #26-12 (May 2026). Connecticut: New law (SB 1) creates the Individual Coverage Health Reimbursement Arrangement (ICHRA) tax credit. The credit is available to qualified small businesses — i.e., a business with fewer than 50 in-state employees on the date of its credit application and that has adopted an individual coverage health reimbursement arrangement (individual arrangement) in lieu of a traditional employer-provided health insurance plan. The credit may be taken against the insurance companies and health care centers tax, the corporation business tax, and the income tax. The amount of credit allowed for the year is the lesser of (1) the sum of the qualified contribution made by the business during the year, or (2) $1,000 per covered employee. Credit not used in the year in which it was earned will expire; it is not refundable. The credit is allowed in the first year in which the business offered an individual arrangement and the immediately succeeding year. The credit is not allowed for other years. The tax commissioner will approve applications for the reservation of a credit on a first-come, first-served basis. The aggregate amount of credit allowed for the year is capped at $5 million. SB 1 also creates an income tax credit for qualified small businesses (i.e., a partnership or S corporation with gross income in the prior tax year not exceeding $70 million and has not exceeded such gross income threshold through related person transactions) that incur eligible research and development (R&D) spending in Connecticut. For tax years beginning on or after January 1, 2026, an eligible qualified small business may claim the credit against its personal income tax liability (other than income tax withholding). The credit is equal to 6% of R&D expenses paid or incurred by the qualified small business during the tax year. The credit is allowed to the extent the qualified small business has applied for and received a tax credit voucher from the Department of Economic and Community Development. Qualified small business may apply to the commissioner to reserve an allocation of credit based on the amount of R&D expenses the business intends to pay or incur in the tax year. The annual limit on the credit is $1.5 million per business and $25 million in total. If the amount of credit exceeds the taxpayer's tax liability, the taxpayer may apply to the revenue commissioner to exchange the excess credit for a refund of 90% of the excess if the taxpayer is a biotechnology business or 65% of the excess for other qualified small businesses. SB 1 extends the redemption rate for the film and digital media tax credits claimed against the sale tax through tax years beginning before January 1, 2028 (from January 1, 2026). And creates an additional film and digital media production tax credit for production expenses or costs incurred for a state-certified qualified production for which principal photography shooting occurs in the city of Bridgeport, Hartford or New Haven for at least one day. The amount of credit ranges from 30% up to 50% of such expenses, based on the amount of expenses or costs incurred. The additional credit is available in 2027 and 2028. Conn. Laws 2026, Pub. Act 26-68 (SB 1), signed by the governor on May 26, 2026. Hawaii: New law (HB 3125) modifies the renewable energy technologies income tax credit and repeals select tax credits. The law caps the aggregate amount of the renewable energy technologies tax credit, which can be claimed against corporate and individual income taxes, available to $40 million in each calendar year 2027, 2028, 2029 and 2030. Beginning January 1, 2031, no money will be allocated for this credit. The law limits an individual's eligibility to claim the credit to individual taxpayers with adjusted gross income not exceeding $175,000 for single filers and $350,000 for joint filers. The new law includes a certification requirement, under which, taxpayers, by March 1 of each year in which a renewable energy technology system was installed, must submit a written, certified statement containing specified information to the Hawaii State Energy Office of the Department of Business, Economic Development and Tourism (Department). The Department will certify a taxpayer's eligibility to claim the credit; certification does not limit the Department of Taxation's ability to audit and adjust the tax credit amount. The renewable energy technologies credit provisions do not apply to tax years beginning after December 31, 2029. HB 3125 adds sunset dates to the following tax credits: (1) the capital goods excise tax credit does not apply to tax years beginning after December 31, 2027; and (2) the renewable fuels production tax credit does not apply to tax years beginning after December 31, 2028. The technology infrastructure renovation tax credit under Haw. Rev. Stat. Section 235-110.51 is repealed on January 1, 2028. The high technology business investment tax credit under Haw. Rev. Stat. Section 235-110.9 and the tax credit for research activities under Haw. Rev. Stat. Section 235-110.91 are repealed on January 1, 2029. Haw. Laws 2026, Act 24 (HB 3125), signed by the governor on May 21, 2026. Ohio: On May 27, 2026, Governor Mike DeWine announced that he directed the Ohio Tax Credit Authority to pause consideration of any new data center tax exemption while the Ohio Legislature studies the growth of data centers. The governor's press release made clear that this pause "only suspends the ability for data centers to request tax exemptions in Ohio; it is not a data center ban." Ohio Gov., Press Release "Governor DeWine Announces Pause of Data Center Tax Exemption" (May 27, 2026). South Carolina: New law (SB 556) creates a tax credit for renewable natural gas (i.e., "natural gas derived from landfill gas … which has been upgraded to a quality similar to fossil natural gas and has a methane concentration of [90%] or greater"). The credit is available for tax years beginning after 2025 and ending before tax year 2030. The credit may be claimed against the income tax or license fees imposed under S.C. Code Section 12-20-50, or both. The credit is equal to 25% of the costs incurred by a taxpayer for the purchase and installation of equipment used to produce renewable natural gas for commercial purposes. Such costs must be certified as having been incurred by the State Energy Office. The credit may be claimed in the year in which the equipment is placed in service and may be claimed for all expenditures incurred for the purchase and installation of the equipment, including related engineering, permitting and other necessary services. The amount of credit a taxpayer may claim in a year is limited to the lesser of 25% or $5 million of the credit. The credit is nonrefundable. A taxpayer may carry forward unused credit earned before the end of 2030 for 15 years from the year in which the credits were earned. The taxpayer may transfer the credit to another person who is eligible to use the credit. Taxpayers will have to repay a prorated portion of credits previously claimed if the facility receiving the credits ceases operations, fails to maintain commercial production or removes qualifying equipment from service within five years of the date the equipment is placed in service. SB 556 took effect on May 19, 2026. S.C. Laws 2026, Act No. 225 (SB 556), signed by the governor on May 19, 2026. Santa Cruz, CA: Beginning July 1, 2026, the City of Santa Cruz, California (City) will impose an additional transfer tax of up to 2% of the value of real property on certain real estate transactions in excess of $1,800,000 under the Workforce Housing Affordability Act of 2025 (the WHAA Tax). The City caps the WHAA Tax at $200,000. Tax Alert 2026-1153 includes a chart that provides an example of how the Santa Cruz transfer tax is calculated before July 1, 2026, and on or after that date. Taxpayers engaging in real estate transactions in Santa Cruz should carefully evaluate the impact of the WHAA Tax, including increased transaction costs, timing considerations and the application of exclusions or exemptions. Connecticut: New law (SB 1) allows municipalities to provide a homestead property tax exemption for properties that are the primary residence of the owner of such dwelling or to the person for whom such dwelling is held in trust. The exemption is equal to $50,000 of the assessed value of the dwelling. Alternatively, municipalities may provide a property tax exemption equal to not less than 5% and not more than 35% of the assessed value of an owner-occupied dwelling, such as a condominium, that are primary residences of such owners. A municipality may not provide both exemptions. These provisions took effect from passage and apply to assessment years beginning on or after October 1, 2027. Conn. Laws 2026, Pub. Act 26-68 (SB 1), signed by the governor on May 26, 2026. Louisiana: On May 16, 2026, Louisiana voters rejected a proposed constitutional amendment — Amendment 4 (created by Act 221, 2025 Regulation Session) — which would have authorize parishes to irrevocably exempt business inventory from ad valorem taxation or provide a reduced fair market value (FMV) percentage applicable to business inventory property. The amendment also would have expanded the classifications of property subject to ad valorem tax by adding: (1) public service property, excluding land owned by a railroad company, and (2) business inventory. Because the constitutional amendment failed, legislation enacted in 2025 (HB 365), will not take effect. Georgia: New law (HB 1247) provides that a court or an administrative hearing officer in interpreting the state's constitution, statutes or published rules shall not defer to a state agency's determination or interpretation of such authorities, regardless of whether such determination is written or unwritten. This provision should not be construed to alter any standard of judicial review expressly provided by statute. The law deletes references in multiple statutory provisions to the judicial standard of deference accorded to administrative rules. HB 1247 took effect May 12, 2026. Ga. Laws 2026, Act 718 (HB 1247), signed by the governor on May 12, 2026. Kentucky: On April 17, 2026, Governor Andy Beshear approved SB 129, which, retroactive to January 1, 2026, reinstates the unemployment insurance Service Capacity Upgrade Fund (SCUF) surcharge and establishes a new, annually determined SCUF framework beginning in 2027. From October 1, 2018, through December 31, 2026, the SCUF diversion is 0.075% when the SUI trust fund balance exceeds the balance as of December 31, 2017. Beginning January 1, 2027, SB 129 replaces the fixed reduction with a new structure under which rates will be reduced by 0.0115%, and the Secretary of the Education and Labor Cabinet will set the adjustment percentage annually, not to exceed 0.025%. The law also requires that the adjustment be suspended when specified thresholds are not met, including when SUI trust fund balance does not exceed its level as of December 31, 2022. For additional information on this development, see Tax Alert 2026-1107. West Virginia: On April 1, 2026, Governor Patrick Morrisey approved SB 1053, which, effective July 1, 2026, establishes a temporary state unemployment insurance (SUI) automation and administrative fee of 7% that is offset with a corresponding reduction in the employer's experience-based SUI tax rate. Under SB 1053, all contributory employers, except those with a zero experience-rated SUI tax rate, will be required to pay a new annual unemployment automation and administration fee equal to 7% of total taxable wages for the prior 12-month period ending the preceding June 30. A corresponding credit is applied to the employer's experience rate; however, the credit may not bring the SUI tax rate below zero. Revenue from the surcharge will be deposited into a new Unemployment Automation and Administration Fund to support modernization of the state's unemployment system, administrative operations, and workforce development initiatives, subject to an annual collection cap of $18 million. The Commissioner of WorkForce West Virginia may reduce that percentage to ensure total fee collections do not exceed $18 million annually. The surcharge will expire once total collections reach $60 million, or on July 1, 2031, whichever occurs first. The portion of the surcharge directed to the Unemployment Automation and Administration Fund is not treated as a SUI contribution for federal unemployment tax (FUTA) purposes and is not included in West Virginia contributions reported on Form 940, which may affect the calculation of the FUTA tax credit. For more on this development, see Tax Alert 2026-1102. Oregon: New law (HB 4134) increases the rate of tax imposed on the sales, service or furnishing of transient lodging from 1.5% to 2.75%.1 Tax is computed on the total retail price, including all charges other than taxes paid by a person for occupancy of the lodging. This rate change applies to consideration charged on or after January 1, 2027, for the sale, service or furnishing of transient lodging. HB 4134 takes effect on June 5, 2026. Ore. Laws 2026, ch. 140 (HB 4134), signed by the governor on April 9, 2026. Virginia: New law (SB 129 and HB 145) imposes a 10% tax on a fantasy contest operator's fantasy contest revenue. An addition fee of 2.6% will be imposed on such operator's fantasy contest revenue; the revenue from this fee will be used to cover the cost of the administration and regulation of the operating of fantasy contests. Fantasy contests include online fantasy or simulated games or contests with an entry fee in which players compete against each other, and prizes and awards are made known to the players before the start of the contest, among other requirements. SB 129 and HB 145 take effect on July 1, 2026. Va. Laws 2026, ch. 566 (SB 129) and ch. 565 (HB 145), both bills signed by the governor on April 13, 2026. Federal — Multistate: A recent bill introduced in the US House of Representatives, the "Safeguarding Americans' Fairly Earned Retirement Act of 2026" (HR 8338 or the Act), would establish conditions under which certain securities, digital assets or investment accounts (i.e., covered assets) held by a financial institution may be escheated under state unclaimed property laws. Under the Act, a financial institution would be prohibited from yielding any of the following to a state: (1) custody of a covered asset, (2) any proceeds from the sale of covered asset, or (3) a payment related to the covered asset (e.g., dividends, principal payment), pursuant to state unclaimed property laws, regulations or administrative provisions or other means of escheatment (collectively, unclaimed property law), unless certain conditions are satisfied. In the case of a covered asset directly held or beneficially owned by an individual, the Act outlines the following conditions to be met before escheatment: (1) confirmation of the owner's death at least three years before yielding custody; (2) no expression of interest in the assets, proceeds or payments by a fiduciary representing the estate for at least three years before yielding custody; and (3) where another individual holds an ownership interest in the asset, confirmation of that other individual's death. A financial institution's obligations would differ under the proposed framework based on the ownership of the covered assets. In an oversight letter sent to National Association of Unclaimed Property Administrators (NAUPA) one day prior to HR 8338's introduction, Senator Warren requested information on recent state law trends on how Americans' can access their unclaimed property, noting that "states hold significant reserves of unclaimed property, relative to that reclaimed by property owners." Those trends include the increased adoption of an "inactivity" standard (i.e., even if mail is delivered, a state can escheat funds if the account holder has not made contact with the company holding the account) instead of a "Returned by Post Office" standard (i.e., dormancy period calculations begin when the mail is returned as undelivered) for triggering dormancy period calculations and shortening dormancy periods from five years to three years. Senator Warren also noted that property owners are increasingly suing states to access unclaimed funds, citing examples of recent litigation in Ohio, Colorado and Delaware. For a more on these developments, see Tax Alert 2026-1117. International — Portugal: On May 13, 2026, the Court of Justice of the European Union (CJEU) released its decision in the Portuguese referral of C-603/24 Stellantis Portugal, holding that transfer pricing adjustments, implemented by debit and credit notes, do not constitute consideration for a separate supply of services. Although the judgment did not explicitly confirm the point, the judgment strongly suggests that the credit and debit notes adjust the value of the underlying supply, in this case the purchase of cars. For additional information on this development, see Tax Alert 2026-1080. International — Tanzania: The Court of Appeal of Tanzania, on May 22, 2026, issued a landmark decision in Civil Appeal No. 212 of 2025 between Gulf Badr Group (Tanzania) Limited (the taxpayer) and the Commission General, Tanzania Revenue Authority (TRA), clarifying the applicability of VAT on demurrage charges. The Court held that demurrage charges (i.e., penalties for breach of contract) do not constitute a taxable supply under the Value Added Tax Act, 2014 and are therefore not subject to VAT. The decision overturns earlier determinations of the Tax Revenue Appeals Tribunal as well as the Tax Revenue Appeals Board, which had upheld the TRA's position that demurrage constitutes a taxable supply in the form of rent and therefore is subject to VAT at the standard rate of 18%. For more on this development, see Tax Alert 2026-1154. Tuesday, July 14, 2026. Navigating state tax implications for REITs: A journey from basics to advanced concepts (1:00-2:00 pm ET / 10:00-11:00 am PT). This webcast will examine the state and local tax treatment of real estate investment trusts (REITs), addressing the technical complexities with practical approaches. We will go through common pitfalls with REIT state income tax reporting: dividends-paid-deduction mechanics, net operating loss (NOL) utilization and combined reporting regimes. As we delve into more advanced considerations, we will discuss transaction and transfer-tax obligations, emerging legislative developments, and critical 2025 filing season considerations. The following topics will be discussed: (1) REIT basic concepts for state and local taxation; (2) dividends-paid-deduction complexities; (3) NOL utilization considerations; (4) combined reporting requirements; (5) transaction and transfer-tax considerations; (6) state legislative updates impacting REITs; and (7) filing season reminders for tax year 2025. Register here. 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.
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