What you need to know: State tax observations on federal tax reform

Latest news

On December 22, 2017, President Trump signed tax reform legislation (HR 1) that lowers business and individual tax rates, modernizes US international tax rules, and provides the most significant overhaul of the US tax code in more than 30 years.

What it means for State Tax

A diverse and wide-ranging number of state tax implications will arise simply as a result of how/whether states conform to the federal Internal Revenue Code provisions. There are a number of critical elements that have the potential to significantly affect state tax and financial statements starting in 2017:

  • A deemed repatriation toll charge
  • Full expensing of certain property
  • Interest expense limitations

Looking beyond 2017, other elements of tax reform may have a significant state tax and financial statement impact. As these elements progress through the legislative process, we anticipate issuing new and updated Insights and providing them in real-time on this page.

How PwC can help 

  • Quantitative solutions: Model how repatriation, a territorial tax system, 100% expensing, and interest limitations may affect the state tax base, apportionment, and state tax attributes.
  • Global and domestic incentives: Develop a state incentives strategy for additional investments made by companies as a result of tax reform. 
  • Legal entity rationalization and value chain transformation: Implement proposed business and structural changes in a way that may reduce detriments and enhance benefits of tax reform from a state tax perspective.
  • Provision review: Review state tax deferred results from tax reform, including the impact of state conformity to or decoupling from the interest expense limitation and full expensing.
  • State automation and reporting: Perform state specific calculations that may no longer be required for federal tax filings due to states' nonconformity to the federal changes.

Featured State tax insights

Contact us

Peter Michalowski
National SALT Practice Leader
Tel: +1 (646) 471 5259

Eric Burkheiser
Partner, Detroit
Tel: +1 (313) 394 6407

Scott Austin
Principal, Philadelphia
Tel: +1 (267) 330 2567

Robert Ozmun
Partner, Boston
Tel: +1 (617) 530 4745

Follow us