The dedicated state and local tax (SALT) advisors at Doeren Mayhew spotlight the top SALT news from across the country to keep your business up-to-date. Take a look at these trending headlines from the past month.

State Individual Income Tax


The state anticipates increasing taxes on wealthy individual taxpayers. Also, global intangible low-taxed income (GILTI) income might be required to be included for state income tax purposes. However, neither proposal appears to have an easy path to enactment.


Amendment No. 2 lowers the maximum allowable individual income tax rate and makes the deduction for federal income taxes paid optional beginning in 2022.

North Carolina

North Carolina Senate Bill 105 lowers North Carolina’s individual income tax rates from 5.25% to 3.99% over six years beginning on Jan. 1, 2022. Additionally, the standard deduction and the child tax deduction will both be increased.

State Corporate Income Tax


On Jan. 12, 2017, the California Court of Appeal affirmed the trial court’s decision in Swart Enterprises, Inc. v. California Franchise Tax Board, concluding that an out-of-state corporation was not “doing business” in California, when the corporation’s only connection to California was its passive ownership of a 0.2 percent membership interest in a California-based, manager-managed limited liability company.


Connecticut S.B. 1202 contains several new provisions, including:

  • A 10% surtax that will be extended for two additional years from Jan. 1, 2021, to Jan. 1, 2023.
  • The capital base tax will begin to phase out starting in 2024 instead of 2021.
  • For tax years beginning on or after Jan. 1, 2021, and before June 23, 2021, additional taxes related to the surtax extension and the delay in the phaseout of the capital base tax will not trigger interest on the underpayment of estimated tax.
  • Unused R&D credit generated in tax years beginning on or after Jan. 1, 2021, can be carried forward for 15 years.

North Carolina

As a result of North Carolina Senate Bill 105, the state’s corporate income tax will be phased out by 2030, with the reduced rate starting in 2025. Also, franchise tax will be calculated only on a business’ North Carolina net worth starting in 2023.

Rhode Island

Rhode Island published a new webpage providing taxpayers with guidance for Rhode Island’s tax treatment of Paycheck Protection Program (PPP) loans.


Vermont released its latest draft of proposed amendments to corporate income apportionment rules on Nov. 2, 2021, which reflected the state’s shift to market-based sourcing for services and intangibles.

State Passthrough Entity Tax


On Dec. 20, 2021, Michigan enacted a law allowing S corporations and most partnerships to pay income tax at the entity level. Read more here.


According to Massachusetts H. 4009, eligible partnerships and S corporations may file and pay a 5% excise tax on their Massachusetts income at the entity level. The owners of the passthrough entities can claim a refundable credit equal to 90% of each owner’s share of the taxes paid.

North Carolina

North Carolina Senate Bill 105 allows eligible partnerships and S corporations to elect to be taxed at the entity level starting in 2022. The election cannot be revoked after the due date of the return. A publicly traded partnership cannot make the election.

State Sales and Use Tax


The Iowa Department of Revenue released updated guidance regarding remote sellers’ permit requirements. If the remote seller has multiple out-of-state locations, and those locations generated $100,000 or more total sales, the seller only needs one sales tax permit for its entire business instead of one for each location.


Kansas 2021 Legislative Session Senate Bill 50 eliminated the “click-through” nexus provisions for sales and use tax purposes.


The constitutional amendment that would have set up a centralized sales and use tax collection system in Louisiana failed during a statewide election held on Nov. 13, 2021. The National Taxpayers Union Foundation (NTUF) filed a lawsuit on Nov. 15, 2021, challenging the state’s decentralized sales and use tax collection system, arguing that the costs for businesses to comply with Louisiana’s system outweighed the revenue the state receives.


Tennessee Letter Ruling No. 21-08 was issued by the Tennessee Department of Revenue, explaining that online advertising and data processing platforms do not qualify as telecommunications services or computer software services. Thus, these activities are not subject to Tennessee’s sales and use tax.


The Texas Comptroller released Texas Publication 94-119 regarding the sales tax of security services, clarifying what are taxable and nontaxable security services. Taxpayers providing taxable security services must collect sales tax on the total amount billed for the services unless the purchasers provide resale or exemption certificates. Sales and use tax is due on materials, supplies and equipment used to provide a taxable security service. Security services provided to a government agency, or a nonprofit organization exempt from sales tax are not taxable.

IRC Conformity


Georgia H.B. 7EX will update Georgia’s tax code to reflect federal tax code changes made between Jan 1 and March 11, including federal laws related to the child and dependent care credit. The credit will be fully refundable for tax years beginning in 2021.

North Carolina

North Carolina Senate Bill 105 updated its Internal Revenue Code (IRC) conformity date to April 1, 2021.

Additional State Bills and Updates


On Nov. 11, 2021, California rejoined the Multistate Tax Commission (MTC) as a sovereignty member state after it withdrew from the Multistate Tax Compact in 2012. Compact member states codify the Multistate Tax Compact within their tax code, while sovereignty member states do not. In 2020, sovereignty states gained a veto power under the new MTC voting mechanism, which attracted some states to start participating in MTC meetings or projects.


According to Massachusetts Draft Guidance on Partnership Tax Audit Procedures, within 180 days after the final determination date, the partners of a partnership under federal audit will be required to file an amended state return to report and pay any additional tax due as a result of the audit.


Michigan S.B. 248 passed the House with amendments and was sent back to the Senate for approval. Under the bill, partnerships will be required to file a federal adjustment report with the Department of Treasury within 90 days of the final determination date of the adjustment. Each partner’s distributive share of the adjustment will also need to be reported and additional tax should be paid within 90 days as well.


The State Intercompany Transaction Service (SITAS) Committee discussed a revised information-sharing agreement during its July 13, 2021, meeting. However, the MTC had concerns over the confidentiality of the information that will be shared under the agreement and provided five recommendations to strengthen taxpayer confidentiality while balancing the member states’ ability to conduct fair and timely audits.

If you have questions about how these recent changes may affect your business’s state and local tax liability, contact Doeren Mayhew’s dedicated state and local tax advisors today.