16 July 2026 State and Local Tax Weekly for June 19 and June 26 Ernst & Young's State and Local Tax Weekly newsletter for June 19 and June 26 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. Illinois budget includes new social media and digital taxes, modifies net loss limitation, extends various tax credits On June 16, 2026, Illinois Governor JB Pritzker signed omnibus tax bill, SB 3019 (Pub. Act 104-0468), which includes several business and individual tax changes, discussed below. Tax on targeted advertising services: Beginning January 1, 2027, a new 10% tax applies to gross receipts from targeted advertising services (TAS) provided in Illinois. TAS is provided in Illinois when the location of the user-consumer of the targeted advertisement is in the state. The TAS provider determines the location of the user-consumer by using the totality of the user-consumer contact information in the provider's possession or control. There is a rebuttable presumption that a user-consumer is located in Illinois if the contact information associated with a device or an account on record with the TAS provider indicates an Illinois home address, mailing address or internet protocol address or other user-consumer data showing a "place of primary use" in Illinois. The law defines TAS as "any programmatic written, oral, or graphic statement or representation conveyed through a digital interface or any other method of delivery, including … banner advertising, search engine advertising, interstitial advertising, and other comparable advertising services that use personal information about the people to whom the ads are being served." Those services do not include advertisement services on digital interfaces owned or operated by or on behalf of a news media entity. Business entities that are part of a controlled group of corporations are treated as a single entity for purposes of meeting the definition of a provider for purposes of this tax. TAS providers that exceed the $1 million gross-receipts threshold must register with the Department of Revenue (Department) and obtain a certification of registration from the Department by the end of 2026, in order to engage in such business in Illinois on or after January 1, 2027. Certificates of registration are valid for one year and will automatically be renewed for an additional year unless otherwise notified by the Department. Digital-asset tax: Beginning January 1, 2027, a new digital-asset tax applies to the privilege of receiving from a digital asset broker any digital asset business activity by a customer in Illinois. The tax rate is 0.2% of the value of digital asset business activities (i.e., exchange, transfer, or storage of a digital asset as part of a business or on behalf of a customer who has contracted with the business for the provision of those services). Tax will be imposed on brokers, exchanges, custodians or wallet providers that have a physical presence in Illinois or at least $100,000 in in-state digital-asset receipts. It is rebuttably presumed that sales occurring electronically or by phone are made by customers located in Illinois if the contact information associated with a device or account on record with or available to the digital asset broker indicates an Illinois home address, mailing address, internet protocol address or other data showing "place of primary use" in Illinois. For sales occurring in person, the physical location controls the sourcing. Digital assets brokers must register with the Department and obtain a certification of registration by the end of 2026, in order to engage in such business in Illinois on or after January 1, 2027. Certificates of registration are valid for one year and will automatically be renewed for an additional year unless otherwise notified by the Department. Social media platform fee: Beginning January 1, 2027, a new social media platform fee is imposed on social media platforms based on the number of users on whom it collects data within a month. The law requires monthly reporting and remittance by the 14th day of each month, reporting the average number of monthly Illinois-based platform users to the Secretary of State (Secretary), who will administer the tax. The social media platform fee applies at a tiered rate as follows, for social media platform companies that have:
The fees are subject to increase annually beginning January 1, 2028, based on consumer price index increases. If a social media platform does not pay the fee due, a penalty equal to 100% of the unpaid fee and any penalties will apply each month until the fee is paid. Net loss deduction (NLD) limitation: A law enacted in 2024 (HB 4951) placed a $500,000 annual cap on the NLD allowed for corporations (other than S corporations) for each tax year ending on or after December 31, 2024, and before December 31, 2027. (See Tax Alert 2024-1178). SB 3019 modifies the NLD cap, phasing in the amount that can be claimed. As modified, the NLD cap is the greater of $500,000 or:
Similar to current law, taxpayers will not count, for purposes of the NLD carryover period, any year in which the NLD to be used would have been restricted. IRC Section 1202 addback: For tax years ending on or after December 31, 2026, individuals, trusts and estates, and partnerships must add back the gain excluded from gross income under IRC Section 1202 from certain qualified small business stock. Pass-through entity tax (PTET) modification: Effective for tax years ending on or after December 31, 2026, a partnership making the PTET election may elect to determine its tax base under one of the following methods:
Consistent with the PTET election, this election is made annually and applies to all partners of the partnership for the tax year. Once made, the election is irrevocable for the tax year. Tax credits and incentives: SB 3019 extends the sunset period for several tax credit and incentive programs, as follows:
A separate bill, SB 3645 (Pub. Act 104-0532, enacted June 26, 2026), repeals and extends the effective dates of various acts. Among the changes is a revision to the effective date of the Interchange Fee Prohibition Act, moving it from July 1, 2026, to July 1, 2027. The act, which prohibits interchange fees from being collected on the Illinois sales or excise tax portion or the gratuity portion of an electronic payment, has been subject to ongoing litigation. For additional information on this development, see Tax Alert 2026-1374. Alaska: Vetoed bill (HB 280) would have amended the state's apportionment rules to move to market-based sourcing. The bill was vetoed by the governor on June 18, 2026. Georgia: New law (HB 1159), for tax years beginning on or after January 1, 2025, allows individuals, corporations and partnerships to subtract from taxable income the income they receive under the: (1) Farmer Bridge Assistance Program for which payments 2025 acres were reported to the United States Department of Agriculture (USDA) on or before December 19, 2025, and (2) the Assistance for Specialty Crop Farmers Program of the USDA for which payments 2025 acres were reported to the USDA's Farm Service Agency on or before March 13, 2026. These subtractions are allowed to the extent such income is included in federal adjusted gross income or federal taxable income. HB 1159 took effect upon the governor's approval. Ga. Laws 2026, Act 424 (HB 1159), signed by the governor on May 6, 2026. Illinois: The Illinois Department of Revenue (IL DOR) adopted amendments to 86 Ill. Adm. Code 100.3200 through 100.9720, including new section 100.3375, which implements legislative changes adopting the Finnigan method for apportioning sales within a unitary business group (hereafter, adopted rule). Effective for tax years ending on or after December 31, 2025, a person is taxable in another state if any member of its unitary business group is taxable in that other state. A taxpayer is taxable in another state if (a) in that state the taxpayer is subject to a net income tax, a franchise tax measured by net income, a franchise tax for the privilege of doing business or a corporate stock tax; or (b) that state has jurisdiction to subject the taxpayer to a net income tax regardless of whether it does so. The sales factor rule under Section 100.3370 is modified to provided that for tax years ending on or after December 31, 2025, gross receipts from sales of tangible personal property are in this state if the taxpayer is a member of a unitary business group and neither the taxpayer nor any member of the unitary business group are taxable in the state of the purchaser. If a member of a unitary business group is not taxable in the state of the purchaser, the sale is attributable to Illinois if the property is shipped from an office, store, warehouse, factory or other place of storage in Illinois and no member of the unitary business group is taxable in the state of the purchaser. Additionally, gross receipts attributed to a unitary group member's sale of services that are not taxed in the state where the services were received (or deemed to be received) are excluded from the sales factor if no member of the unitary business group is taxable in that state. New Section 100.3375 describes when two or more persons engaged in a unitary business are required to apportion business income attributable to the state using the combined apportionment method and how the combined apportionment method is applied. The adopted rule amends nexus provisions under Section 100.9720, to provide that "[f]or taxable years ending on or after December 31, 2025, see IITA Section 304(e) and [86 Ill. Adm. Code] 100.3375 … for purposes of applying the Finnigan rule for combined apportionment and throwback/ throwout." Several illustrative examples have been added to the adopted rule. The adopted rule took effect on June 2, 2026. Ill. Register, Vol. 50, Issue 25, June 22, 2026. Vermont: New law (HB 933) updates the state's date of conformity to the Internal Revenue Code (IRC) to December 31, 2025 (from December 31, 2024) but decouples from select federal changes made by the One Big Beautiful Bill Act (or OBBBA). Taxpayers are required to add back to Vermont net income (corporations), or taxable income (individuals, trust and estates), an amount equal to the federal bonus depreciation deduction under IRC Section 168(k) or Section 168(n). In a tax year in which federal bonus deprecation is claimed, a state tax deduction is allowed in an amount equal to the depreciation deduction that would be allowed on the property if the taxpayer had made the election under IRC Section 168(k)(7) or Section 168(n)(6) to not claim bonus depreciation on that property. An additional deduction will be allowed in the tax year that the property is sold or otherwise disposed. HB 933 decouples from OBBBA changes to the treatment of domestic research and experimental (R&E) expenditures as follows:
Taxpayers are required to add back to Vermont net income an amount equal to the amount of income deducted under IRC Section 250 for the tax year, to the extent deducted from net income. The above IRC conformity update and OBBBA-related changes are retroactively effective on January 1, 2026, and apply to tax years beginning on and after, January 1, 2025. Vt. Laws 2026, Act 164 (HB 933), signed by the governor on June 18, 2026. Georgia: New law (SB 33) establishes the Local Homestead Option Sales Tax (LHOST) which allows eligible local governments (i.e., county, consolidated government or municipality) in which a homestead exemption is in effect and that have derived revenue from an ad valorem tax on homestead property within a special district to impose a special sales and use tax at a rate of up to a 1% — the LHOST. The LHOST generally may not be imposed on an item or transaction that is not subject to the state sales and use tax, except the LHOST may apply to sales of motor fuels as prepaid local tax and to sales of food and food ingredients and alcoholic beverages. A LHOST will be imposed on the final day of the maximum period of time, which cannot exceed 10 years, as specified by the local Act granting the homestead exemption for the county or consolidated government. Revenue generated from the LHOST will be used to fund homestead property tax exemptions from ad valorem taxes. Starting in 2028, a LHOST may be imposed by a local government that has adopted and approved by local referendum such tax. This homestead exemption is in addition to, not in lieu of any other homestead exemptions. SB 33 took effect upon approval of the governor. Ga. Laws 2026, Act 461 (SB 33), signed by the governor on May 11, 2026. Louisiana: New law (HB 1088) provides a rebate to an approved aerospace facility owner or approved aerospace facility contractor for sales and use taxes paid on purchases, leases, rentals or uses of equipment, machinery, materials, supplies, or services used directly in aerospace activities at an approved aerospace facility. The law defines "aerospace activity" as "any act or activity related to the research, development, testing, manufacture, preparation, launch, operation, reentry, descent, landing, or post-landing recovery of a launch vehicle, spacecraft, payload, or related equipment, including but not limited to integration, conditioning, transport, and associated ground support operations, whether conducted on-site or involving overflight." The term does not include activities related to general administration, managerial or support functions, such as payroll, human resources, accounting, legal, marketing, sales, and information technology support. The rebate applies to purchases made on or after July 1, 2026. An "approved aerospace facility" must be certified as such by the Louisiana Economic Development and the facility owner must attest that the project will create at least 200 new direct, permanent, full-time jobs in Louisiana and that it intends to expend at least $1 billion in new capital investments in the state on or after July 1, 2026 and before July 1, 2031. Certified facility must enter into an agreement with the Louisiana Economic Development; the agreement must include certain information, including providing an initial term of rebate eligibility of 20 years. The rebate agreement may be renewed for an additional 10 years. Rebates may be recaptured and the rebate agreement may be terminated if the aerospace facility fails to create the required number of jobs or make the required investments. The law describes the process for submitting request for state and local sales and use tax rebates. HB 1088 takes effect on July 1, 2026. La. Laws 2026, Act 190 (HB 1088), signed by the governor on May 11, 2026. Maryland: The Maryland Comptroller provided guidance on recently enacted legislation (HB 1026 and SB 893, both enacted May 12, 2026), which in response to the penny shortage, allows merchants conducing a cash transaction to round either (1) the price of goods or services being sold or (2) the amount of change due to the customer. Such transactions are rounded to the nearest nickel as follows: if the price or amount of change ends in (1) one, two, six or seven cents, round down to the nearest cent divisible by five, or (2) three, four, eight or nine cents, round the price up to the nearest cent divisible by five. Cash transactions include in-person transaction or transactions over the telephone, mail or internet when the customer pays cash. Rounding is done after subtracting any discount or deduction and after applying any applicable tax or fee. Rounding does not change the taxable price of a product or service; thus, sales and use tax is calculated without regard to any rounding. The Comptroller's guidance includes examples of how the rounding rules apply. Md. Comp., Maryland Tax Alert "Penny Shortage and Rounding Cash Transactions" (May 13, 2026). South Carolina: New law (SB 866), the "Municipal Tax Relief Act", allows certain municipalities to impose up to a 1% sales and use tax by ordinance, subject to a voter referendum, to provide property tax relief to owner-occupied homes. The tax may be imposed for a limited amount of time, not to exceed eight years from the date of imposition. A local sales and use tax imposed under these provisions will be administered and collected by the Department of Revenue in the same manner as the state sales and use tax. This tax is in addition to all other local sales and use taxes and it applies to sales subject to state sales and use tax; this tax does not apply to unprepared food that may be purchased with US Department of Agriculture food coupons. The law provides guidance on remitting and reporting the tax, including tax on construction contracts executed before the imposition of the municipal sales tax and services billed regularly on a monthly basis. At least 20% of the revenue generated from this tax must be used to provide a credit against a taxpayer's municipal ad valorem tax liability. SB 866 took effect upon becoming law. S.C. Laws 2026, Act 228 (SB 866), signed by the governor on May 19, 2026. Tennessee: In response to a ruling request from a company that provides its customers with a digital infrastructure that allows them to manage and independently conduct auctions of real and tangible personal property, the Tennessee Department of Revenue (TN DOR) determined that the company is not a marketplace facilitator and, as such, is not required to collect and remit Tennessee sales and use tax made through its platform. In so finding, the TN DOR said that while the company's platform is a marketplace as it is an electronic platform where taxable tangible personal property is offered for sale, the company does not meet the definition of a marketplace facilitator. The TN DOR reasoned that the company's role is limited to providing the platform and technical support for the platform; it does not collect payments from its customers' customers or contract with third-party payment processors to indirectly collect payments; company's customers use their own payment processors to collect payment and transmit payment back to them. The TN DOR also found that because the company is not a marketplace facilitator it is not a dealer for sales and use tax purposes for items sold on its platform. Tenn. Dept. of Rev., Revenue Ruling #26-04 (May 13, 2026, posted June 1, 2026). Federal: On June 6, 2026, the U.S. District Court for the District of Columbia (court), in Oregon Environmental Council v. IRS, vacated IRS Notice 2025-42 and remanded it to the IRS. The court found that the IRS failed to engage in reasoned decision-making when it eliminated the long-standing 5% safe harbor for determining when construction begins on wind and solar projects, as required for IRC Sections 45Y credits (clean energy production) and 48E credits (clean electricity investment). For additional information on this development, see Tax Alert 2026-1285. Federal: In Notice 2026-39 (Notice), the IRS modifies earlier guidance on defining "energy communities" for purposes of the increased production tax credits (PTCs) under IRC Sections 45 and 45Y and investment tax credits (ITCs) under IRC Sections 48 and 48E. The guidelines are used to determine if project areas qualify as statistical areas or "coal closure" census tracts. For more on this development, see Tax Alert 2026-1284. Colorado: New law (HB 26-1289) enhances, repeals and modifies various tax credits. For income tax years beginning on and after January 1, 2027, the law modifies the enterprise zone (EZ) research and experimental (R&E) activities credit by requiring investments of at least $150,000 in qualified R&E activities within an EZ to qualify for the R&E activities state income tax credit. The credit for R&E activities is equal to 3% of the amount by which the taxpayer expended for such activities in the EZ in the income tax year that exceeds the average of the taxpayer's total expenditures for such activities in the two immediately preceding tax years in the area of the EZ. In addition, starting in 2027, the law prohibits businesses with 50 or more business facility employees at any time during the income tax year from claiming the EZ employer-sponsored health insurance tax credit for tax year. For income tax years beginning on and after January 1, 2027, the law expands the industrial clean energy tax credit to include installing equipment used for utilization of biomethane. HB 26-1289 also creates a sustainable aviation fuel purchase credit that can be claimed against the state income tax. The credit, which is available for tax years 2027 through 2032, is equal to an amount not less than $1.50 per gallon of sustainable aviation fuel purchased in the state. The amount of the credit is increased by one cent for each percentage of carbon intensity reduction exceeding 50%. The aggregate amount of sustainable aviation fuel purchase credit available is capped at $3 million per year. For tax years beginning before January 1, 2027, the law repeals the sustainable aviation fuel production credit. The law repeals the state commercial vehicle investment tax credit in 2027. Other tax credits modified by HB 26-1289 include the wildfire hazard mitigation credit, the small food business credit, the electric powered law equipment credit available to retailers that sell such equipment, the tax credit for expenditures made in connection with a geothermal energy project, the tax credit for residential energy storage systems, the innovative motor vehicle tax credit, the innovative truck tax credit, the heat pump technology and thermal energy network tax credit, the credit for rehabilitation of vacant buildings in an EZ, the electric bicycle tax credit, and the film festival tax credit. Colo. Laws 2026, ch. 364 (HB 26-1280), signed by the governor on June 3, 2026. Illinois: Governor JB Pritzker on June 5, 2026, directed the Illinois Department of Commerce and Economic Opportunity to pause processing data center investment program agreements starting July 1, 2026. While the processing of these agreements is on pause, the governor said that his administration will work with the General Assembly and stakeholders on a "comprehensive framework that protects affordability, safeguards our natural resources, and ensures responsible growth across Illinois." (The framework is set forth in the press release.) Ill. Gov., Press Release "Gov. Pritzker Pauses New Data Center Tax Incentives" (June 5, 2026). Vermont: New law (HB 933) increases the amount of the research and development (R&D) tax credit a taxpayer may claim against tax to 75% (from 27%) of the amount of the federal tax credit for eligible R&D expenditures under IRC Section 41(a) that are made within Vermont. This change takes effect on, and applies to tax years beginning on and after, January 1, 2027. Vt. Laws 2026, Act 164 (HB 933), signed by the governor on June 18, 2026. Connecticut: New law (HB 5442) limits the property tax exemption for Class I renewable energy sources. The exemption applies to Class I renewable energy source consisting of equipment and devices that have a primary purpose of collecting solar energy and generating electricity through photovoltaic effect. HB 5442, effective for assessment years commencing on and after October 1, 2025, limits the exemption to such equipment and devices for which the owner received, on or after July 1, 2025, permission to operate from an electric distribution company or a municipal utility furnishing electricity. The exemption does not apply to any real property on which such equipment and devices are located or installed. The law also modifies the solar capacity tax. For uniform solar capacity tax years beginning on and after July 1, 2026, the annual tax is imposed on owners of a solar photovoltaic system in Connecticut for the generation or displacement of energy. As modified by HB 5442, the tax is imposed for a period of: (1) 19 solar capacity tax years on a solar photovoltaic system that receives permission to operate from an electric distribution company or a municipal utility furnishing electricity on or after July 1, 2025, or (2) 20 solar capacity tax years for systems that receive such permission to operate on or after July 1, 2026. Conn. Laws 2026, Pub. Act 26-134 (HB 5442), signed by the governor on June 4, 2026. South Carolina: New law (SB 688) exempts from ad valorem taxation the first $10,000 of the net depreciated value of business personal property owned by a small business. For purposes of this exemption, a "small business" is an independently owned and operated business that employs less than 100 full-time employees or has gross annual sales of less than $10 million. The exemption applies to property tax years beginning after 2026. S.C. Laws 2026, Act 243 (SB 688), signed by the governor on May 22, 2026. New York: The New York Department of Taxation and Finance (NYDOT) issued guidance on reporting certain deprecation and research and experimental (R&E) deductions for tax year 2025. The recently enacted state budget bill retroactively decoupled New York law from the federal tax provisions as modified by the One Big Beautiful Bill Act (or OBBBA) related to IRC Sections 174 and/or 174A on R&E expenditures and IRC Section 168(n) on the special depreciation allowance for qualified production property. Taxpayers that already filed a 2025 tax return must file an amended 2025 tax return to report modifications described in this notice, while taxpayers that have not yet filed their 2025 tax return must report these modification on a timely filed 2025 return. Penalty relief is available to taxpayers that timely file or amend their 2025 tax return reporting these modifications. Taxpayers must add back the full amount of the federal deduction under IRC Section 168(n). A subtraction modification allowed for the amount reported as depreciation on qualified production property, with the amount calculated as if the special depreciation election had not been made. The notice describes which forms to use to calculate the modification and to report the modification for individuals, partnerships, estates and trusts, C corporations (Article 9-A), New York S corporations, insurance corporations (Article 33), and partners, shareholders and beneficiaries. Taxpayers also must add back the full amount of any federal deduction for foreign and domestic R&E expenditures. A subtraction is allowed for foreign and domestic R&E expenditures paid or incurred: (1) after January 1, 2025 — expenditures must be amortized over a 60-month period, and (2) before January 1, 2025 — expenditures continue to be amortized under the federal rules in effect on January 1, 2022. The notice describes which forms to use to report the modification for individuals, partnerships, estates, trusts, and corporations (Articles 9-A and 33), partners, shareholders and beneficiaries. N.Y. Dept. of Taxn. and Fin., Important Notice N-26-1 (June 16, 2026). Illinois: The Illinois Department of Employment Security has amended state unemployment insurance (SUI) regulation 56 Ill. Adm. Code 2730.155, which, effective with wage payments made after June 30, 2026, excludes from SUI taxable wages employer contributions under a 401(k)-retirement plan. Prior to this amendment, both employee pretax and employer 401(k) contributions were included in SUI taxable wages. For additional information on this development, see Tax Alert 2026-1337. Oklahoma: In Letter Ruling 25-007, the Oklahoma Tax Commission (OTC) addresses employer income tax withholding obligations for nonresident employees traveling into Oklahoma. The ruling (1) clarifies when wages become Oklahoma-source, (2) confirms the limited statutory exemption for nonresident employees, and (3) distinguishes between conference attendance and company-related activities for withholding purposes. Oklahoma broadly defines wages as all remuneration for services performed by an employee for an employer. Wages are sourced based on where the services are physically performed. In Letter Ruling 25-007, the OTC considered nonresident employees who primarily work outside Oklahoma but periodically travel into the state. The ruling confirms that compensation attributable to services performed in Oklahoma is subject to income tax withholding, requiring employers both in and outside of Oklahoma to evaluate and allocate wages based on in-state activities. The ruling distinguishes between types of in-state activities. Attendance at a conference in Oklahoma that is not sponsored by the employer does not constitute services performed for the employer, and wages paid during that time are not subject to income tax withholding. In contrast, participation in company-related meetings or employer-directed activities in Oklahoma constitutes services performed in the state, and wages attributable to those activities are subject to withholding. Payments for services performed in Oklahoma by a nonresident individual are excluded from taxable wages and income tax withholding if the employee's wages do not exceed $300 in any calendar quarter. Once the $300 threshold is exceeded, income tax withholding applies to all Oklahoma-source wages for the calendar quarter. Oklahoma law provides only a dollar-based exemption from nonresident income tax withholding, and not a service-based exemption. Accordingly, Oklahoma income tax withholding applies without regard to the number of days present in the state. While letter rulings are binding only on the taxpayers requesting them, they provide insights into the OTC's administrative interpretation of the law, including how it analyzes specific fact patterns and applies statutory sourcing and withholding rules in practice. For more on this development, see Tax Alert 2026-1289. California: On June 2, 2026, voters in the City of Oakland, CA approved Ballot Measure C, to provide a one-year tax exemption from the city's Business Tax to certain small businesses and certain new businesses. Specifically, the exemption applies to small businesses engaged in Class A (retail sales), Class B (grocers), Class E (business/personal services), Class G (recreation/entertainment) and/or Class I (manufacturing) businesses with annual gross receipts of $1 million or less. This exemption applies for tax year certificate commencing on January 1, 2027 and ending December 31, 2027. The exemption also applies to businesses that establish a new commercial space in the city between January 1, 2027 and December 31, 2027. The exemption would apply to tax year certificate commencing on January 1, 2028 and ending December 31, 2028. The exemption cannot exceed $1 million of owed liability per tax year. (The measure defines terms such as "establishes a new business location" and "commercial space".) The measure sets forth the requirements and process for claiming the exemption. Taxpayer will not be eligible for either exemption if in the prior two business tax years they failed to timely and accurately report their gross receipts and make the required annual business tax payments or if they otherwise have a delinquent tax account. The city may extend the tax exemption for up to three additional years; such extension would be made annually via the adoption of an ordinance providing for the extension. Iowa: New law (SF 2490) imposes a severance tax on the value of oil and gas extracted or severed from land within Iowa. The tax is imposed at a rate of 6% of the fair market value of the oil and gas upon extraction at the wellhead. Expenses incurred by the producer before valuation are not deductible from taxable value. Taxpayers paying severance tax on oil or gas production, however, may deduct the taxes paid from any royalty or other amounts due or to become due to the interest owners of such production; in this case, the person receiving the royalty or other payment is not liable for severance tax. The new severance tax is in addition to any other taxes. Iowa Laws 2026, ch. 1141 (SF 2490), signed by the governor on June 1, 2026. South Carolina: New law (SB 688) modifies the annual corporate license fee, which is based on capital stock and paid-in or capital surplus. Applicable to tax years beginning after July 1, 2026, SB 688 allows a corporation subject to annual corporate license fee whose corporate headquarters are in South Carolina to exclude the first $50 million of equity contributions from a qualifying entity from its paid-in or capital surplus subject to this fee. To qualify for this exclusion, the corporation must obtain a certificate from the South Carolina Research Authority that the exclusions are from equity contributions from a qualifying entity. Qualifying entities include (1) venture capital funds, (2) angel or accredited investors, and (3) private investment firms that do not solicit capital from investors and that meets other requirements. A corporation seeking to claim this exemption must submit an annual report containing specific information. S.C. Laws 2026, Act 243 (SB 688), signed by the governor on May 22, 2026. Federal: The United States Trade Representative (USTR) has initiated a Section 301 investigation into Germany's pharmaceutical pricing regime, reflecting increased scrutiny of foreign government measures that may affect the economics of innovation and global cost allocation in the life sciences sector. The investigation will assess whether Germany's pricing practices for innovative pharmaceutical products suppress prices below fair market value and result in United States (US) consumers bearing a disproportionate share of global research and development (R&D) costs. The investigation follows earlier policy actions, including Executive Order 14297, issued on May 12, 2025, which directed US agencies to address foreign pricing practices that may shift the cost of pharmaceutical innovation onto US patients. The USTR subsequently solicited comments on global pharmaceutical pricing practices and their impact on US commerce. Based on available evidence, the USTR has identified concerns that Germany's pricing mechanisms may reduce pharmaceutical company revenues and discourage continued investment in innovation. For additional information on this development, see Tax Alert 2026-1318. Wednesday, August 5, 2026. FSO SALT transactions quarterly webcast: Navigating emerging state tax developments and transaction trends (1:00-2:00 p.m. ET; 10:00-11:00 a.m. PT). Join us for the inaugural episode of our new quarterly Financial Services (FSO) state and local tax (SALT) transactions webcast series, where we will provide timely insights into emerging SALT developments impacting financial services, real estate, and asset management transactions. Topics to be discussed include: (1) recent state and local legislative developments impacting income and transfer taxes; (2) emerging state and local trends and developments for transactions; (3) state and local considerations for data center investments, including: sales and use taxes, real estate transfer tax and property tax considerations, and credits and incentives opportunities. 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.
Document ID: 2026-1532 | ||
