Key Takeaways
- SALT Is Essential In Due Diligence
- CO - Are Streaming Services TPP?
- SC Grants Automatic 6-month Extension To File
- UT To Tax Targeted Advertising And Digital Streaming Services
- WA Millionaire's Tax Becomes Law
Welcome to this edition of our roundup of state tax developments. The State Tax News and Views is published weekly. Consider the Eide Bailly State & Local Tax team for your state tax planning, compliance and incentive needs.
As we near the end of tax season, state and local tax developments continue to emerge—new taxes are being introduced, existing rules are being refined, and long‑standing principles are being tested in new ways. For businesses and individuals navigating multistate obligations, separating short‑term changes from established rules is especially important during this time of year.
This roundup highlights recent SALT developments through a familiar lens: what’s new, what’s changing, and what still matters. From states expanding sales and gross receipts taxes to digital goods and services, to ongoing efforts to modernize tax administration, to court decisions and compliance issues that remain foundational year after year, these updates reflect where state tax systems are heading—and where taxpayers should continue to focus their attention.
What's New?
MINNESOTA
Minnesota Committee Takes Up Advertising Tax Bill - Emily Hollingsworth, Tax Notes($)
Minnesota legislation to expand the sales tax base to include advertising services is one step closer to being folded into the House’s omnibus tax bill.
The Minnesota House Taxes Committee adopted amendments to H.F. 4343 during a March 25 meeting and laid the bill over for possible inclusion in the chamber’s omnibus tax proposal.
The bill, which was introduced March 16, would subject digital and nondigital advertising services to the state’s sales and use tax. It would provide exemptions for advertising services produced for television, radio broadcasts, and printed publications.
SOUTH CAROLINA
Debate Over Matching Federal Changes Delays South Carolina Taxes - Michael J. Bologna, Tax Notes($)
South Carolina is giving taxpayers an extra six months to file their 2025 tax returns because the state still hasn’t settled on a strategy for alignment with President Donald Trump’s signature tax and spending law.
The state’s Department of Revenue announced late Thursday it is extending the filing deadline for individual tax returns through Oct. 15 while the state legislature continues to work through a bill (HB 3368) that would conform the state to the 2025 tax changes. The department clarified that the extension applies only to the deadline to file returns, “not to pay what you owe.”
UTAH
Utah To Impose Gross Receipts Tax On Targeted Advertising - Zak Kostro, Law360 ($):
Utah will impose an annual gross receipts tax on entities that deliver targeted advertising in the state and meet certain revenue thresholds under a bill signed by the governor.
S.B. 287, which Republican Gov. Spencer Cox signed Wednesday, will impose a 4.85% tax on an entity's gross receipts for a taxable year derived from targeted advertising in Utah, according to the bill text and applicable state sales and use tax statute.
Utah Governor Signs Law Extending Sales and Use Tax to Digital Media - Melissa Menter, Eide Bailly:
Utah Senate Bill 0162, signed into law on March 23, expands the state's sales and use taxes to certain digital products and services.
Beginning July 1, 2026, the tax applies to access to audio-visual works, digital audio works, digital books, or gaming services, including streaming or subscription-based access to such content. The tax applies regardless of the method of delivery or whether access is provided on a single-use or subscription basis.
The legislation also subjects amounts paid for the storage, use, or other consumption of prewritten computer software to sales and use tax, including seller-hosted prewritten computer software.
WASHINGTON
Wash. Will Tax Incomes Above $1 Million By Almost 10% - Maria Koklanaris, Law360($):
Washington state will put a nearly 10% tax on the income of residents who earn more than $1 million under a bill signed Monday by Democratic Gov. Bob Ferguson.
Ferguson signed S.B. 6346, which levies a 9.9% tax on income above $1 million. The first million is not taxed, but any income after that is accountable, according to the bill.
What's Changing?
COLORADO
Colo. High Court Takes Up Netflix's Sales Tax Challenge - Sanjay Talwani, Law360($):
The Colorado Supreme Court will determine whether Netflix's streaming video services are tangible personal property subject to sales tax, the justices said Monday, agreeing to review a state appeals court ruling in favor of the state Department of Revenue.
[...]
The appeals court reversed a state district court ruling and found that the state's definition of tangible personal property was broad enough to encompass entities beyond the sense of touch, such as streaming services.
ILLINOIS
Chicago Area Grapples With Property-Tax Growth Double Inflation - Miranda Davis, Bloomberg Tax ($):
Chicago-area residents are facing some of the country’s highest property taxes, with bills surging at double the inflation rate over the past 30 years, according to a study released Monday.
Property owners paid $19.2 billion in taxes in 2024, a jump of nearly 182% since 1995, Cook County Treasurer Maria Pappas said in a statement published with the analysis. Inflation in the county, which is home to Chicago and 134 other suburban municipalities, rose by less than 91% in the period.
LOUISIANA
La. House Panel Punts On Centralizing Sales Tax - Jaqueline McCool, Law360 ($):
Rep. Josh Carlson, R-Lafayette, voluntarily deferred H.B. 620 and H.B. 658, which would move the state to a centralized system under which sales tax would be collected by the state instead of individual parishes.
Why Centralizing Louisiana's Sales Tax Collection Is Smart - Manish Bhatt, Tax Foundation:
[...]
Two bills currently pending before the legislature (HB620 and HB658) would change this for all by centralizing sales tax collection at the state level.
While transitioning to state-level centralized sales tax collection would require an amendment to the state’s constitution, it is sound tax policy.
UTAH
Utah Cuts Income Tax Rate, Extends SALT Cap Workaround - Paul Jones, Tax Notes ($):
[...]
Another bill signed the same day is H.B. 77, which permanently extends the state’s passthrough entity workaround to the federal cap on the SALT deduction.
What Still Matters?
CALIFORNIA
The Nuts and Bolts of California’s Residency Rules - Timothy P. Noonan and Emma Savino, Tax Notes ($):
As California voters consider an unprecedented “billionaire’s tax” proposal, the state’s notoriously aggressive residency audits have taken center stage for wealthy taxpayers nationwide.1
[...]
In this article, we’ll explore the multifaceted rules governing California residency, highlighting the subjective factors that can trap even the most well-advised taxpayers. We’ll also highlight several cases in which taxpayers have taken on the FTB and won — and many more in which they lost.
PENNSYLVANIA
Pennsylvania BFR Finds Taxpayer's Activities Were Protected by P.L. 86-272 - Melissa Menter, Eide Bailly
The Pennsylvania Board of Finance and Revenue recently concluded that a taxpayer's activities in the commonwealth were protected from the Corporate Net Income Tax under P.L. 86-272.
The taxpayer, a Florida corporation, argued that its activities in the state were limited to the solicitation of sales of tangible personal property. Orders were solicited via phone and email, approved and accepted outside Pennsylvania, and shipped from warehouses in Florida using common carriers. The taxpayer did not provide services in Pennsylvania, and did not own or lease property in the state.
The Board agreed that such activity constitutes the mere solicitation of sales or the "sundry and de minimis" activities that are related to an eventual sale, and are protected by P.L. 86-272.
SEASONED WITH SALT
Tax Tips, Tricks and Opportunities
SALT Due Diligence: A Key Part of Any Sale - Colton Timberlake, Eide Bailly
When selling a business, state and local tax ("SALT") obligations are often overlooked, but they can present significant risks that may jeopardize a transaction. Unlike federal tax issues, SALT rules are highly variable across jurisdictions and encompass a broad range of taxes, including income, franchise, sales and use, property and more. Many business owners mistakenly believe that compliance in their home-state means that they are compliant for SALT purposes, but that is rarely the case. Factors such as economic nexus, remote workforces, and multi-state operations can create hidden exposures.
Risks associated with unaddressed SALT issues can be substantial. Buyers may inherit a seller's unpaid taxes through successor liability, especially if state-specific bulk sale or notice requirements are not met. Unfiled returns and historical noncompliance can lead to open-ended exposure, as the statute of limitations may not apply if returns were never filed. Asset sales may trigger sales or transfer taxes, and the allocation of gain among states can be complex, particularly for multi-state businesses or passthrough entities. These issues can result in last-minute negotiations, escrow requirements, or even cause a deal to fall through.
To avoid costly surprises and ensure a smooth transaction, sellers should conduct a comprehensive SALT review early in the process. By proactively addressing SALT issues, sellers can protect deal value, reduce risk of last-minute complications, and facilitate a successful sale. If your company is anticipating a sale in the near future, contact Eide Bailly's SALT team to help navigate the complexities of SALT and to ensure a smooth transaction.
Make a habit of sustained success.
