The Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) and Families First Coronavirus Response Act (FFCRA) contain many federal tax changes, which we reviewed back in May.
These federal tax changes invariably affect your state and local tax (“SALT”) obligations, and thus it is important to understand whether or not (or to what extent) states and localities adopt such federal tax changes. Most states and localities have adopted varying “conformity” laws, which can be categorized broadly into three groups: rolling, static, and selective. Herein we use the popular acronym, SALT, for convenience, but localities do not necessarily follow the states in which they exist, so it is important to check each jurisdiction.
Below are two maps showing these three categories of states, for both corporate and personal income tax. COVID-19 has created or significantly increased state and local budget deficits, and consequently many of those jurisdictions are looking to de-couple from federal tax law in whole or in part as a means of dealing with these deficits, and some of these jurisdictions have already proposed bills to do so. Therefore, it is important to consult with a tax professional to get the latest information regarding these potential changes, as they could change the maps below.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.