Developments through September 9, 2026
This alert summarizes material third-quarter state and federal tax legislation, regulations, administrative guidance, and ballot measures.
Sales and Use Tax
Legislation
Massachusetts – H. 5518
Pending conference consideration as of July 29. Sections 22A through 22D would exempt rolling stock of common carriers from sales and use tax. COST urged expansion of the proposal to all rolling stock used in business operations.
Nevada – BDR 513
Bill draft requested for 2027. The Joint Interim Standing Committee on Revenue submitted a bill draft request addressing a tax on retail sales of certain digital products. The request signals an issue to monitor for the 2027 session but is not yet introduced legislation.
New York – Tax package
Enacted. The omnibus legislation revises sales tax administration, establishes periodic re-registration for sales tax Certificates of Authority, and creates a temporary program allowing eligible taxpayers to resolve certain outstanding sales tax liabilities with reduced interest and penalties.
North Carolina – S.B. 257 and H.B. 56
Enacted July 7; applicable to billing periods beginning on or after August 6, 2026. S.B. 257 repeals the sales and use tax exemption for electricity used at certified data centers. H.B. 56 provides that the repeal applies beginning with the first electricity billing period commencing at least 30 days after enactment. Other qualifying data-center equipment and infrastructure exemptions remain available.
North Carolina – S.B. 595
Enacted July 2. The omnibus legislation gives remote sellers that exceed only the sales threshold at least 60 days to register and begin collecting and remitting sales and use tax.
Pennsylvania – H.B. 1667
Not expected to advance. The omnibus bill was amended to include a digital advertising tax, a sales tax holiday, and changes to the data center exemption. It was not included in the July budget agreement and was considered unlikely to move in its current form.
Missouri – Amendment 5
Defeated August 4. Voters rejected a measure that would have phased out the individual income tax based on revenue growth and authorized expansion of the sales and use tax base. The potential taxation of additional business inputs was a principal business concern.
Regulations and Administrative Guidance
Alabama – Interchange fee rule
Final rule effective October 15. Amended sales and use tax rules exclude a credit card transaction fee from the taxable measure only when the fee is separate and identifiable from other charges.
California – Digital products, software, and SaaS
Informal rulemaking in progress. The Department of Tax and Fee Administration is developing regulations on the sales and use taxation of electronically delivered prewritten software and SaaS following S.B. 122. Draft regulations were released for a September 10 interested-parties meeting; multiple-points-of-use treatment and bundled transactions are among the issues under discussion.
Colorado – Computer software
Rule-development workgroup. The Department of Revenue is considering rules to implement H.B. 26-1223 and solicited stakeholder input on the scope and content of the guidance.
Colorado – Special Rule 46 – Sales and use tax governing leases of TPP
Final rule adopted July 7. The rule addresses a lessor’s acquisition of property, lease payments, subleases, sale-leasebacks, maintenance contracts, sales of previously leased property, and lessor compliance responsibilities.
Florida – Refund claims using statistical sampling
Draft rule. The Department of Revenue proposed procedures for establishing refund amounts through a sampling method agreed upon by the taxpayer and Department. The proposal addresses record requirements, training, sample design, execution, and projection of results.
Illinois – Remote Retailer Amnesty Program
Final rule effective July 28. The Department adopted rules for the amnesty program running from August 1 through October 31, 2026.
Indiana – Sales and use tax rules
Proposed amendments. The Department proposed a broad modernization of sales and use tax rules that had not been comprehensively updated since 1987. The final text should be reviewed before relying on existing rule language.
Louisiana – LAC 61:I.4405
Summary report issued September 1 following public comments. The Department of Revenue proposed regulations governing the digital-tools exemption and issued substantive revisions during the rulemaking process.
Louisiana – LAC 61:I.4372
Proposed rule. The Department proposed amendments addressing materials used in immovable-property contracts. When a contractor collects sales tax from its customer, the proposal would presume that the parties intended the materials to be transferred before becoming immovable. A customer seeking a refund would be required to rebut that presumption with credible evidence, including contractor documentation concerning when title or possession transferred.
Louisiana – LAC 61:I.4412
Proposed rule. The Department proposed regulations defining qualifying purchases by contractors and subcontractors in connection with tax-exempt public construction projects and implementing the statutory exemption-certificate process.
Missouri – 12 CSR 10-108.700
Proposed rule. A combined delivery-and-pickup charge would be taxable. If the charges are separately stated, only the pickup charge would be taxable.
North Carolina – Remote seller guidance
Department guidance. Effective July 2, a remote seller that exceeds only the sales threshold is allowed at least 60 days to register and begin collecting and remitting sales and use tax.
North Carolina – Data center electricity guidance
Department guidance. The Department confirmed that the electricity exemption was repealed for the first billing period beginning on or after August 6, 2026, and that affected electricity is then subject to the combined general sales and use tax rate.
Pennsylvania – Local sales tax collection
Guidance; enforcement begins October 1. Vendors required to collect Pennsylvania sales tax must also collect Philadelphia’s 2 percent and Allegheny County’s 1 percent local sales taxes on taxable sales to customers in those jurisdictions. Although the law applies retroactively to tax years beginning after December 31, 2025, the Department announced that enforcement would begin October 1, 2026.
Tennessee – State sales tax on international money-transmission services
Enforcement stayed. Public Chapter 1035 would impose state sales tax on money transmitted from Tennessee to a location outside the United States or its territories. The tax is $10 per transaction plus 2% of the amount transmitted in excess of $500. An agreed court order prohibits enforcement while a constitutional challenge is pending; if the law is upheld, enforcement will begin after a 45-day grace period.
Texas – Data processing services
Policy review announced. The Comptroller announced a comprehensive review of the application of sales tax to data processing services following stakeholder discussions concerning the breadth of the current definition.
Property Tax
Legislation
California – A.B. 2172
Awaiting gubernatorial action as of September 9. The bill would authorize counties with a population of 500,000 or more to establish single-member assessment appeals boards beginning January 1, 2027. An appellant could object and obtain review by a traditional three- or five-member board. Commissioners could not accept new appeals after December 31, 2031, although the provisions would remain operative until January 1, 2034.
Pennsylvania – Uniformity Clause proposal
Proposal announced. A co-sponsorship memorandum announced proposed legislation to amend the Pennsylvania Constitution by repealing the Uniformity Clause. No bill number had been assigned as of the latest alert.
Income and Franchise Tax
Legislation
Federal – H.R. 10271
Introduced September 3. The Mobile Workforce State Income Tax Simplification Act of 2026 would provide a 30-day safe harbor for employees temporarily performing work across state lines. It was referred to the House Judiciary Committee; similar legislation, S. 1443, was introduced earlier in the Congress.
Federal – H.R. 10142
Introduced August 24. The Multi-State Worker Tax Fairness Act of 2026 would establish a physical-presence standard for sourcing an employee’s income and prohibit a state from taxing a nonresident’s income earned while the employee was physically outside that state.
California – A.B. 2222
Passed Legislature as of September 9. The bill would modify California’s conformity to IRC Section 162(m), requiring California-specific calculations and tracking of executive compensation. Revenue from the limitation would fund a new tax credit.
California – S.B. 1349
Awaiting gubernatorial action as of September 9. The bill would direct the Legislative Analyst’s Office to assess major tax expenditures and recommend whether they should be reduced or repealed. It expressly includes the water’s-edge election within the definition of a major tax expenditure.
Massachusetts – S. 2041
Not expected to advance. The bill would require corporate taxpayers to include affiliates organized in listed foreign jurisdictions in the Massachusetts combined group. It was reported favorably by the Joint Committee on Revenue but was not expected to advance further during the session.
Missouri – Amendment 5
Defeated August 4. Voters rejected a measure that would have phased out the individual income tax based on revenue growth and authorized expansion of the sales and use tax base.
New Hampshire – H.B. 155
Enacted July 10; effective January 1, 2027. The bill increases the business enterprise tax return filing threshold to $375,000 and provides for biennial inflation adjustments beginning in 2029.
New Hampshire – LSR 2027-0011
2027 drafting request. The request is expected to propose mandatory worldwide combined reporting under the business profits tax. It has not yet been assigned a bill number.
New York – Tax package
Enacted. The omnibus legislation extends the temporary 7.25 percent corporate business income tax rate and the capital-base tax, modifies state and New York City conformity to several federal provisions, and decouples from federal accelerated depreciation for qualified production property and immediate expensing of domestic research expenditures.
North Carolina – S.B. 595
Enacted July 2. The omnibus legislation conforms to the federal centralized partnership audit regime, updates the state’s IRC conformity date, and addresses domestic research and experimental expenditures.
Pennsylvania – H.B. 1667
Not expected to advance. The omnibus bill was amended to include mandatory unitary combined reporting and changes affecting the utility gross receipts tax. It was not included in the July budget agreement and was considered unlikely to move in its current form.
Regulations and Administrative Guidance
Alabama – Nonresident employee withholding
Guidance issued August 25. Employers should withhold only from wages attributable to services physically performed in Alabama. The guidance also addresses the 30-day safe harbor and states that Alabama will not follow Bollinger to the extent that decision applied a convenience-of-the-employer rule inconsistently with the notice.
Louisiana – LAC 61:I.1135 and 1136
Proposed rule. The Department proposed rules implementing Act 430 of 2023 by revising the sales-factor apportionment provisions to remove certain sales from categories treated as apportionable income and eliminate the requirement to exclude unassignable sales from both the numerator and denominator.
North Carolina – Federal conformity and research expenditures
Updated Department guidance. North Carolina updated its IRC conformity date but did not adopt the federal provision allowing immediate expensing of domestic research and experimental expenditures. Corporations taking the federal deduction must adjust federal taxable income for the state difference.
Pennsylvania – Sourcing receipts from services
Proposed rule. The Department proposed corporate tax rules addressing the methodology for sourcing revenue from sales of services.
Pennsylvania – Federal conformity
Department guidance. The Department issued a chart describing Pennsylvania’s treatment of federal changes affecting research expenditures, business interest, and bonus depreciation and updated two corporation tax bulletins.
Utah – Financial institution sales factor
Proposed rule. Proposed amendments would implement S.B. 219 by excluding investment and trading receipts from the numerator while retaining those receipts in the sales-factor denominator.
Credits and Incentives
Legislation
California – A.B. 2222
Passed Legislature as of September 9. The bill would limit the state deduction for certain executive compensation and use the resulting revenue to fund a new tax credit for qualifying local news organizations based on their employment of qualifying journalists during taxable years 2027 through 2031.
New Hampshire – H.B. 1102
Enacted by veto override August 19. The bill increases the annual aggregate research and development credit cap from $7 million to $10 million and the per-taxpayer cap from $50,000 to $100,000.
Pennsylvania – H.B. 1667
Not expected to advance. The omnibus bill includes changes affecting the data center exemption. It was not included in the July budget agreement and was considered unlikely to move in its current form.
North Carolina – S.B. 257 and H.B. 56
Enacted July 7; applicable to billing periods beginning on or after August 6, 2026. S.B. 257 repeals the sales and use tax exemption for electricity used at certified data centers. H.B. 56 provides that the repeal applies beginning with the first electricity billing period commencing at least 30 days after enactment. Other qualifying data-center equipment and infrastructure exemptions remain available.
Regulations and Administrative Guidance
North Carolina – Data center electricity guidance
Department guidance. The Department confirmed that the electricity exemption was repealed for the first billing period beginning on or after August 6, 2026, and that affected electricity is then subject to the combined general sales and use tax rate.
Unclaimed Property
Legislation
Arizona – S.B. 1336
Enacted; effective September 12, 2026. The bill removes exclusions for de minimis business-to-business balances, property owed to a person with a current business relationship, and certain gift cards, tickets, stored-value instruments, and similar property. The change is expected to first affect the 2027 reporting year, although Department guidance limits the practical effect of the repeal.
North Carolina – H.B. 1126
Enacted July 7. The bill permits contingency-fee compensation of unclaimed property auditors and requires holders to notify apparent owners when abandoned property exceeds $25.
Pennsylvania – H.B. 2736
Introduced August 18. The bill would establish standards for treating digital asset accounts as abandoned and permit the State Treasurer to retain digital assets in their original form.
Regulations and Administrative Guidance
Arizona – UPR 26-1
Ruling issued July 31. The ruling construes S.B. 1336 as not expanding the categories of property subject to the Revised Arizona Unclaimed Property Act. Under the ruling, no report or delivery is due for the categories removed from the statutory exclusions.
Montana – Automatic payment of unclaimed property
Final rule effective September 5. The Department adopted rules implementing H.B. 88, allowing the administrator to waive a claim form and automatically pay or deliver qualifying unclaimed property to an apparent owner.
Tax Administration
Legislation
California – A.B. 1519
Awaiting gubernatorial action as of September 9. The bill would revise the term ‘tax liability’ for purposes of the 20-year collection limitations period to mean a liability that is due and payable and generally exclude related interest, penalties, costs, and fees from the term.
California – S.B. 1204
Enacted July 16. The bill requires the Office of Administrative Law to report to the Legislature within 60 days whenever it disapproves a proposed regulation and explain the reasons for the disapproval.
North Carolina – S.B. 445
Enacted August 11. The bill requires courts to apply traditional de novo review when interpreting state rules and regulations. An agency’s interpretation may inform the court but does not control the analysis.
Ohio – H.B. 976
Introduced; not expected to advance in 2026. The bill would create an Ohio False Claims Act without a tax bar. Its late introduction makes action during the current session unlikely, but it remains relevant to tax controversy risk.
Regulations and Administrative Guidance
Montana – Electronic correspondence
Final rule effective September 5. The Department adopted an opt-in framework for sending correspondence, notices, and other communications electronically across applicable tax programs and accounts.
South Carolina – Revenue Procedure 26-4
Issued. The Department summarized common noncompliance penalties and the process and standards for requesting a penalty waiver.
Texas – Taxpayer First Project
Administrative initiative. The Comptroller announced reforms intended to prevent retroactive policy changes, improve administrative hearings, expedite refunds, and communicate policy through public rulemaking rather than internal directives.
Ballot Measures to Monitor
Arizona – Election Date November 3 2026
Sales and Use Tax – Proposition 316 – Local Grocery Taxes
Would retroactively prohibit local governments from adopting or increasing a tax on groceries from July 1, 2025 through June 30, 2027. Thereafter, a new or increased grocery tax would require voter approval and could not exceed 2 percent.
Other Taxes – Proposition 141 – Vehicle Miles Traveled
Would prohibit taxes or fees based on vehicle miles traveled and certain laws or rules monitoring or limiting vehicle miles traveled without consent, subject to exceptions for certain interstate commercial and government vehicles.
California – Election Date November 3 2026
Income Tax – Proposition 3 – High Income Tax Rates
Would make permanent the temporary higher individual income-tax rates for high-income taxpayers that are currently scheduled to expire after 2030.
Income Tax – Proposition 40 – One-Time Wealth Tax
Would impose a one-time tax of up to 5 percent on covered assets exceeding $1 billion for taxpayers who were California residents on January 1, 2026. Covered assets generally include businesses, securities, art, collectibles, and intellectual property, but exclude real property and certain pension and retirement accounts.
Tax Administration – Proposition 41 – State Special Taxes
Would prohibit new state taxes whose revenues are excluded from the constitutional state spending limit and require audits relating to new state special taxes.
Property Tax and Tax Administration – Proposition 42
Would prohibit new state personal-property taxes and certain retroactive state taxes.
Tax Administration – Proposition 43 – Local Revenue Measures
Would limit voters’ ability to approve certain revenue increases for local-government services.
Florida – Election Date November 3 2026
Property Tax – Amendment 2 – Agricultural Tangible Personal Property
Would exempt from ad valorem taxation tangible personal property habitually located or typically present on agricultural land, used in agricultural production or agritourism, and owned by the landowner or leaseholder. The exemption would first apply for tax years beginning January 1, 2027.
Property Tax – Amendment 3 – Homestead Exemption and Assessment Limits
Would increase the homestead exemption applicable to non-school property taxes to $150,000 in 2027 and $250,000 in 2028, with inflation adjustments thereafter, and reduce the annual assessment-growth cap for non-homestead property from 10 percent to 5 percent. The amendment also contains provisions concerning certain new Florida residents and permissible uses of local property-tax revenue.
Louisiana – Election Date November 3 2026
Property Tax – Amendment 1 – Disabled Veteran Exemption
Would allow the surviving spouse of a deceased veteran with a service-connected disability to make a one-time transfer of the additional property-tax exemption to another qualifying property.
Property Tax – Amendment 2 – Millage Adjustments
Would allow a local taxing authority to continue levying a reduced millage without losing its ability to adjust the rate up to the maximum authorized rate established following a prior reassessment.
Property Tax – Amendment 6 – Additional Exemption for Seniors
Would authorize parishes and municipalities to provide an additional property-tax exemption for qualifying homeowners who are at least 65 years old and qualify for the special assessment level.
Property Tax – Amendment 9 – Special Assessment Income Limit
Would increase the maximum income a person may receive and still qualify for the special assessment level for homestead property.
Credits and Incentives and Property Tax – Amendment 10 – Rehabilitated Property
Would authorize property-tax exemptions for rehabilitated blighted or derelict property and require implementing legislation.
North Carolina – Election Date November 3 2026
Income Tax – Constitutional Income Tax Rate Limit
Would reduce the maximum individual and corporate income-tax rate permitted by the state constitution from 7 percent to 3.5 percent, effective for taxable years beginning on or after January 1, 2027, if approved.
Property Tax – Local Property Tax Limitations
Would require the General Assembly to enact general laws limiting increases in local property-tax levies, which may include exceptions. The specific limits would depend on subsequent legislation.
Oklahoma – Election Date November 3 2026
Property Tax – State Question 847 – Assessment Caps
Would revise constitutional limits on annual increases in the fair cash value of certain property and modify provisions governing the senior property-value freeze.
Tennessee – Election Date November 3 2026
Property Tax – Amendment 2 – State Property Tax Prohibition
Would prohibit the General Assembly from imposing a state tax on real or personal property. The amendment would not prohibit local property taxes.