Key Takeaways
- LA's Taxation of SaaS Creates Complexity at Parish Level
- IN Tax Amnesty
- ME Includes Millionaire's Tax In Budget
- OR Extends PTET Election
- State Disaster Relief is a Disaster
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.
States are reaching for the familiar carrots and sticks this spring-but not always handing them out evenly. Some are offering generous incentives to shape taxpayer behavior, while others are narrowing exemptions or looking for new revenue sources. At the same time, courts continue to weigh in, reminding tax agencies that policy goals still have legal limits.
This week's state and local tax developments reflect that balance. From data center tax incentives facing continued scrutiny, to legislative debates over who should bear the tax burden, to court decisions reinforcing federal and statutory limits on state taxing authority, one thing is constant: states are offering rewards, serving up penalties, and testing the edges of their authority - but they don't always get the final say.
Carrots and Sticks: When States Use Taxes to Steer Decisions
States continue to use tax policy as both an incentive and a deterrent. Recent developments highlight how aggressive these efforts can be - and how varied the approaches remain across jurisdictions.
Do Sports Wager Tax Rates Affect Betting Volume? - Matthew Knittel and Robyn Toth, Tax Notes ($):
INDIANA
Indiana Announces 2026 Tax Amnesty - Melissa Menter, Eide Bailly:
Indiana published guidance on the upcoming tax amnesty program, which will run from July 15 through September 9, 2026.
Individuals and businesses with outstanding tax liabilities for tax periods ending before Jan. 1, 2024 may be eligible to participate, provided they did not participate in prior tax amnesty programs. Taxpayers with an INTIME account will be able to look up their eligible tax liabilities beginning May 18, 2026.
To participate, taxpayers must either:
- Pay eligible liabilities in full prior to September 9, 2026, or
- Enter into a payment plan and complete payment by June 7, 2027.
Upon completion, the Department of Revenue will waive any related interest, penalties and collection fees.
RHODE ISLAND
Rhode Island DOR Proposes Regulation Establishing Non-Owner-Occupied Property Tax- Bloomberg Tax ($):
UTAH
Tilting at Social Media Windmills in Utah - Billy Hamilton, Tax Notes ($):
Cox signed another bill, S.B. 73, on March 19, which imposes a 2 percent tax on online providers of material that is “harmful to minors” — meaning sites containing pornographic content. Also signed just ahead of the statutory deadline was S.B. 162, which closes a sales tax loophole for streaming services by clarifying that all digital content — including streamed and downloaded video, audio, books, and gambling — is subject to the state’s sales and use tax.3
More States Jump Into the Data Center Tax Break Debate
As data centers continue to appear in the news, states are reassessing whether generous tax incentives still deliver the promised economic benefits. Several legislatures are now scaling back or eliminating these exemptions in response to cost, energy, and revenue concerns.
NEBRASKA
Nebraska Law Eliminates Data Center Exemptions - Emily Hollingsworth, Tax Notes ($):
L.B. 901 also allows the Department of Revenue to charge several new collection and assessment fees to fund the department's enforcement efforts.
NORTH CAROLINA
NC Gov. Calls for Overhaul of Data Center Tax Breaks - Maria Koklanaris, Law360 ($):
Stein told his task force on energy policy Wednesday that the special tax exemptions North Carolina has for data centers are too costly and should be reduced or eliminated. The tax breaks, which provide data centers with sales and use tax exemptions if they invest at least $75 million, are no longer needed in their current form, the governor said.
WASHINGTON
Washington Trims Sales Tax Break for Data Centers - Paul Jones, Tax Notes ($):
On April 1 Gov. Bob Ferguson (D) approved S.B. 6231, which eliminates the tax break in order to shore up revenue for the state.
Drawing the Lines: Who Pays, What's Taxed, and What Gets Relief
States are continuing to redraw the boundaries of their tax systems by refining exemptions, imposing targeted surcharges, and clarifying who qualifies for relief. Recent developments show how these line-drawing exercises can significantly shift tax outcomes for specific taxpayers and industries.
ARKANSAS
Appeals Court Rejects Arkansas Hospital's Exemption Argument - Caitlin Mullaney, Tax Notes ($):
In an April 1 decision in Baptist Memorial Hospital — Jonesboro Inc. v. Towell, Judge Wendy Scholtens Wood of the Arkansas Court of Appeals found that the portion of Baptist Memorial Hospital — Jonesboro Inc.'s (NEA Hospital's) property that was leased to a Northeast Arkansas Clinic Charitable Foundation Inc. (NEA Clinic) physician practice group did not qualify for a property tax exemption.
MAINE
Maine Budget Adopts Millionaire's Tax - Emily Hollingsworth, Tax Notes ($):
The tax was approved under supplemental budget bill L.D. 2212, signed by Gov. Janet Mills (D) April 10. The budget also expands a property tax credit program and phases in conformity with the federal deduction for domestic research and experimental expenses and the expanded federal standard deduction.
[...]
L.D. 2212 imposes a 2 percent income tax surcharge on the portion of income exceeding $1 million for single filers and over $1.5 million for joint and head of household filers.
OREGON
Oregon Governor Signs SALT Cap Workaround Extension - Paul Jones, Tax Notes ($):
The legislation also updates a reference to the federal tax code to ensure that Oregon continues to tax foreign income that was designated as net controlled foreign corporation tested income by the One Big Beautiful Bill Act (P.L. 119-21).
Advocacy for State Disaster Tax Relief - Brian Myers, Mo Bell-Jacobs, and Ning Yim, The Tax Adviser:
[...]
The remaining 41 states,1 plus the District of Columbia and one local jurisdiction (New York City) do not make it clear that taxpayers can rely on binding state disaster tax relief, due to the absence of clear laws or regulations.
[...]
Because of the lack of uniformity in state tax disaster relief provisions, it has become extremely burdensome for taxpayers doing business in multiple states to track the different disaster tax relief provisions across the states, given the varying treatment.
Limits on State Taxing Authority
Even as states push to expand their taxing reach, courts continue to reinforce statutory and federal limits on that authority. Recent decisions show where state tax agencies may have gone too far.
LOUISIANA
Louisiana Tax Appeals Board Vacates Assessment, Holds Military Spouse May Elect Domicile Under MSRRA - Bloomberg Tax ($):
NEW JERSEY
Wayfair Doesn't Buoy NJ's 86-272 Rules, Biz Group Argues - Paul Williams, Law360 ($):
[...]
The trade group was responding to arguments that the New Jersey Division of Taxation made in a brief last month invoking the Wayfair decision, which overturned precedent requiring businesses to be physically located in a state to be required to collect and remit sales tax. The division asked the court to dismiss the ACMA's challenge to the rules, but the association countered that the division was attempting to "change the meaning" of P.L. 86-272 through the regulations.
TEXAS
American Airlines Wins Fight With Texas Over Franchise Tax - Michael Nunes, Law360 ($):
In an opinion released Thursday, a panel for the Fifteenth Court of Appeals said the state's franchise tax, as applied to certain American revenue, functioned as a tax on gross receipts from air commerce or air transportation, which is prohibited under the federal Anti-Head Tax Act. The court upheld a refund of $108,000 in franchise tax assessed against the company stemming from roughly $1 billion in baggage fee revenue in 2015.
SEASONED WITH SALT
Tax Tips, Tricks and Opportunities
Parish-Level Complexity Emerges from Louisiana's SaaS Sales Tax - Scott McCrillis, Eide Bailly:
Louisiana’s decision to expand its sales tax to include Software as a Service (“SaaS”) and certain digital products, effective January 1, 2025, has added a new layer of complexity for businesses operating in the State. Under La. Rev. Stat. Ann. §47:301.3(9), charges for access to prewritten computer software—like SaaS subscriptions—are subject to state sales tax. While this brings Louisiana in line with other states that tax digital products, it also means that companies must pay close attention to how these rules apply to their operations.
What makes Louisiana unique is that each local parish has the authority to set and administer its own local sales tax rules and regulations. Even though the state has tried to make things easier by offering a centralized system for collecting sales tax, participation by parishes is voluntary. As a result, some parishes fully tax SaaS and digital services while others partially tax these items or take a narrower view. Several parishes have issued no formal guidance at all. This means that SaaS providers and customers need to check not only the state’s tax rules, but also the specific requirements in each parish where their services are used. With 64 parishes, each potentially having different definitions, rates, and exemptions, the compliance landscape can quickly become complicated.
For businesses, the varied landscape of local regulations means that extending sales tax to SaaS involves more than simply applying the state rate. Companies must closely monitor where services are delivered and ensure compliance with specific local tax requirements in each parish. Until Louisiana adopts a more standardized statewide system, organizations should anticipate ongoing compliance complexities and maintain robust risk management protocols when engaging in SaaS transactions within the state.
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