Doeren Mayhew’s state and local tax (SALT) advisors highlight the latest SALT news across the nation to keep your business in the know. Here are some notable recent updates in legislation:

State Income Tax Deadline Extensions

Several U.S. states extended its 2020 tax filing and payment deadlines to May 17, 2021. States affected by the winter storms earlier this year (Texas, Oklahoma and Louisiana) will benefit from special deadline extensions to provide extra relief for victims until June 15, 2021. Hawaii and New Hampshire are the only states with no extended tax deadlines.

SALT Deduction Workaround


On March 15, 2021, Arkansas adopted an elective pass-through entity (PTE) tax as a workaround to the $10,000 limitation of the federal SALT deduction. The tax is a flat 5.9% rate on the net taxable income of the entity; net capital gain is subject to half the tax rate. It’s effective for tax years beginning on or after Jan. 1, 2022. General and limited partnerships, limited liability companies and S corporations all qualify for the workaround. An election must be made each year by the majority of members with voting rights. Net operating losses (NOLs) may be carried forward.

New York

On April 6, 2021, New York Governor Andrew Cuomo and the state legislature agreed to the fiscal year 2022 budget making a number of changes to the state’s tax code through Senate Bill 2509, including an optional pass-through entity tax workaround. Effective for tax years beginning on or after Jan. 1, 2021, electing entities are taxed at the following marginal rates:

  • 85% for incomes below $2 million
  • 65% for incomes between $2 million and $5 million
  • 3% for incomes between $5 million and $25 million
  • 9% for incomes over $25 million

The annual election is generally due by the due date of the first estimated payment (March 15 for calendar year taxpayers), but the due date for 2021 is Oct. 15, 2021.


Wisconsin’s PTE tax was recently amended, stating an electing S corporation may claim 30% or 60% long-term individual capital gain exclusion for tax years beginning after Dec. 31, 2019.

Conformity to the IRC

The following states updated their respective conformity to match the federal Internal Revenue Code (IRC):

  • Alabama
  • Arizona
  • Georgia
  • Idaho
  • Maryland
  • Michigan
  • New York
  • South Carolina
  • South Dakota
  • Utah
  • Virginia
  • West Virginia
  • Wisconsin

PPP Loan Treatments

California, Ohio and Wisconsin have each updated their respective treatment of Paycheck Protection Program (PPP) loans.


Previous and new rounds of PPP loan forgiveness are now excluded from income taxes. Deductions of up to $150,000 for expenses paid with PPP loans are now allowed.


The second round of PPP funding is now exempt from Ohio’s commercial activity (CAT) tax. The initial PPP loan forgiveness was previously excluded from CAT.


The state now conforms to the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s treatment of forgiven PPP loans.

Washington D.C.

As announced on April 14, 2021, D.C. gross income does not include PPP loans awarded and subsequently forgiven.

Economic Nexus


On April 19, 2021, Florida Governor Ron DeSantis approved Senate Bill 50, enacting remote seller and marketplace facilitator nexus. Effective July 1, 2021, remote retailers and marketplace providers making a substantial number of remote sales, defined as sales exceeding $100,000 during the previous calendar year, to Florida customers are required to register, collect and remit Florida state and local option sales and use taxes.


Eliminated its 200 or more separate transactions threshold component, effective Feb. 20, 2021.

Apportionment and Sourcing


The state implemented a single-sales factor apportionment in place of the previous three-factor apportionment formula and eliminated its throwback rule effective for tax years beginning after Dec. 31, 2020.


Missouri implemented a mandatory single-sales factor apportionment and market-based sourcing method, which will be effective for tax years beginning after Dec. 31, 2019.

New Hampshire

The state implemented market-based sourcing requirements for sales other than tangible personal property. The requirements are effective on or after Dec. 31, 2021.

New Mexico

New Mexico implemented market-based sourcing for sales of services and intangibles, as well as mandatory combined reporting for tax years beginning on or after Jan. 1, 2020.

West Virginia

On April 9, 2021, West Virginia Governor Jim Justice signed into law House Bill 2026, adopting significant changes to the state’s income tax code including adopting market-based sourcing, a single-sales factor apportionment and limitations on temporary or mobile worker withholding. These changes are effective for tax years beginning on or after Jan.1, 2022.

Transfer Pricing

The Multistate Tax Commission is relaunching its State Intercompany Transactions Advisory Service (SITAS) Committee after four more years, signaling a new focus on related-party transactions. This committee will examine ways to help states audit large multistate companies. Indiana’s advance pricing agreement (APA) program and North Carolina’s Voluntary Corporate Transfer Pricing Resolution Initiative are two recent developments in the state transfer pricing issue.


Virginia businesses may be required to refile 2019 returns due to transfer pricing issues. The state’s amendment requires corporate taxpayers who are members of a unitary business to file returns disclosing the net income of their combined group for the 2019 tax year. The requirement mainly applies to large multistate companies with a deadline of June 1, 2021. Failure to comply with the requirement may lead to a penalty of up to $10,000.

The data gathered will be used to compare tax returns previously received using a separate reporting system. Virginia is working to assess the feasibility of transitioning to a unitary combined reporting system.

Digital Ad Tax

After Maryland enacted its Digital Ad tax in Feb. 2021, the Massachusetts House of Representatives introduced three bills related to the digital advertising tax. Two of the bills borrow and mimic Maryland’s legislation, attempting to fix some of the issues in Maryland’s law. However, they still leave a lot of questions unanswered. The third bill, HD 3558, calls for the establishment of a special commission to study a broad range of collateral consequences of enacting a digital advertising tax.

Unemployment Tax Benefits

The stimulus plan signed into law by President Biden allows individuals to exempt $10,200 in unemployment benefits from their federal taxes, which creates complications for state tax agencies in mid-filing season.

States with rolling conformity will automatically adopt any changes to the federal tax law unless they take action against it. Conforming states will need to figure out ways to send refunds to individuals who overpaid unemployment tax while coping with the loss of state revenue. Non-conforming states will also have to consider revising tax forms and instructions, reminding taxpayers to add back exempted unemployment compensation for state tax purposes.

Research and Development Credits


Amendments were proposed to regulations concerning the research and development sales tax exemption for qualified research, which clarify conformity to federal regulations, property depreciation for exemption eligibility purposes, the definition of qualified research, and the application of the “Four-Part Test”. May 16, 2021, is the changes’ earliest date of adoption.

Additional State Bills

Ohio Senate Bill 18

On March 31, 2021, Ohio Governor Mike DeWine signed Ohio Senate Bill 18 into law, incorporating several recent changes including the Consolidated Appropriation Act, 2021 and the American Rescue Plan Act of 2021. The bill reduced the pass-through entity withholding tax rate for nonresident investors to 3%, effective Jan. 1, 2023. The new bill also conformed to the IRC as of March 31, 2021, but allowed taxpayers to elect to use the IRC as of March 27, 2020.

Idaho House Bill 170

Idaho’s House Bill 170 allows excess business losses to be carried forward and deducted as Idaho NOL for up to 20 years for state income tax purposes, but prohibits carrybacks of any excess business losses. The new bill is applicable retroactively to Jan. 1, 2018.

Mississippi House Bill No. 1446

This bill would allow an income tax deduction for otherwise deductible expenses if the payment for such expenses is made with the grant or loan program of the PPP, and such expenses are allowed as deductions for federal income tax purposes.

Nevada S.B. 346

The legislation would impose an excise tax on the retail sale or use of “specified digital products,” including digital audio works, digital audiovisual works, digital books, digital code and other digital products. The tax rate would be equal to the state sales and use tax rate in the county where the buyer of the digital product resides.

Tennessee House Bill No. 776

This bill would grant an excise tax deduction for COVID-19 relief payments.

Utah Senate Bill 25

Utah’s Senate Bill 25 clarified the state’s calculation of the 80% limitation on Utah NOL carryforwards and is applicable retroactively to Jan. 1, 2021.

If you have any questions or concerns about how these new SALT provisions may affect your business, contact Doeren Mayhew’s dedicated state and local tax advisors today.