January 2024 state and local tax update

As we enter 2024, it is important to note that there were many significant state tax developments throughout 2023. Specifically, many states had legislative updates and/or changes spanning different areas including, but not limited to, income tax and procedural issues.

Notably, in December 2023, New York adopted the much-anticipated regulations relating to the state’s corporate tax reform legislation that took effect in 2015. The regulations interpret and/or provide guidance on the statutory corporate tax reform legislation via definitions and illustrative examples. The regulations address numerous topics in detail such as the computation of tax, apportionment, net operating losses, special entities and combined returns, among others.

Further, California recently adopted amended regulations to give taxpayers more clarity and certainty regarding the procedures for petitioning the California Franchise Tax Board for the use of an alternative apportionment method for corporate tax purposes.

Additionally, the majority of states have enacted optional pass-through entity taxes (PTET). State PTET elections arose in response to the state and local tax deduction limitation enacted by the Tax Cuts and Jobs Act. PTET filing elections are enacted on a state-by-state basis, and as such, guidance relating to such elections are continually updated. Specifically, many states including, but not limited to, Hawaii, Iowa, Montana, Nebraska and Virigina issued recent state specific guidance relating to the state PTET election in 2023.

Due to the complex and ever-changing state tax legislation and guidance, it is important to consult with a SALT advisor on a regular basis to ensure that the changes that came about in 2023 that may be relevant to your tax situation are properly accounted for, and further, as 2024 is likely to bring its own set of state tax updates.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.