Scott Roberti, managing director at EY who advises on state and local tax, explains why states are still deciding whether to follow last year’s federal corporate tax changes. He discusses which federal provisions states are targeting, political standoffs in places like D.C. and Arizona, and how data-center incentives and sales/property tax reforms are shifting. Filing season remains unusually uncertain.
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volunteer_activism ADVICE
Monitor State Guidance Before Filing
Do monitor state guidance closely when advising corporate clients on filings and accounting adjustments.
Scott Roberti says 17 states issued guidance so far and the rest are proposing changes while sessions continue.
insights INSIGHT
OB-3 Changes Hit States Differently Than TCJA
States view OB-3 differently than TCJA because OB-3 accelerates deductions rather than expanding the tax base.
That shift matters because states balance budgets annually and immediate expensing creates sudden fiscal pressure.
volunteer_activism ADVICE
Plan For State Decoupling On R&E Expensing
Do expect and plan for state decoupling from immediate R&E expensing and retroactive federal changes.
Roberti notes many states are decoupling and some propose phased conformity to manage fiscal impacts.
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Tax-filing season is well underway, and yet many states are still figuring out whether to conform to or decouple from provisions in last year's GOP-led tax overhaul, especially the deductions and other breaks for corporate taxpayers. The upshot is one of the more complicated filing periods in recent years.
Corporate taxpayers are watching which states reject federal tax policy changes, such as those related to immediate expensing for research and development or property investments. Just in the past week, lawmakers in Republican-controlled states like Florida and Democrat-led states like Oregon moved ahead in decoupling from some of those corporate tax provisions to preserve billions of dollars in state revenue.
Then there's the unique situation in Washington, DC, where a local law severing the city's tax code from more than a dozen provisions in the 2025 federal tax rewrite was met with Congress's formal disapproval. That set off a dispute between Capitol Hill and city leaders over whether the district's decoupling measure is in effect. (DC officials say it is.)
Most of all, corporate taxpayers are looking for clarity from the states as they plan their filings, Scott Roberti, a managing director focusing on state and local tax in EY's national tax practice, says on this week's episode of Talking Tax. Roberti tells Bloomberg Tax editor Benjamin Freed that so far, at least 17 states have issued some sort of guidance on the conformity issue. Roberti hopes the remainder finish up soon in time for the end of filing season and quarter-end accounting.
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