Skip to Content
Close-up view of a podium and a microphone.

State and local tax advisor: July 2021

July 29, 2021 / 41 min read

Are you looking for the latest changes in state and local taxes? Find the July 2021 roundup here.

The states covered in this issue of our monthly tax advisor include:

All states

Corporate, personal income taxes: Multi-State Worker Tax Fairness Act introduced in Senate

The Multi-State Worker Tax Fairness Act of 2021 was introduced in the U.S. Senate. The purpose of the act is to limit the extent to which states may apply their income tax to compensation earned by nonresident telecommuters and other multi-state workers.

The act provides that in applying state income tax laws to the compensation of a nonresident individual, a state can find a nonresident individual is present or working in the state for a time period only if the nonresident individual is physically present in the state and the state cannot impose nonresident income taxes on the individual’s compensation for any period of time when the nonresident individual is physically present in another state.

Physical presence

A state is barred from finding a nonresident individual is physically present in a state on the grounds that:

Periods of time

To determine the periods of time when compensation is paid, no state can deem a period of time when a nonresident individual is physically present in another state and performing tasks in that other state to be:

S.B. 1887, as introduced in the U.S. Senate, May 27, 2021.


Corporate, personal income taxes: Elective pass-through entity tax enacted

For tax year 2022 and after, partnerships, limited liability companies, and S corporations may elect to pay Arizona income tax at the entity level.

Tax rate

The entity-level tax applies at the rate of 4.5% to:

If an electing entity does not pay the amount of tax owed as a result of the election, the Department of Revenue may collect the amount from owners based on their proportionate share of the income.


An entity must make the election by the due date or extended due date of its return.

The election does not apply to owners that are not individuals, trusts, or estates. The portion of taxable income attributable to those owners is not included in the entity-level tax.

Also, the election does not apply to owners that opt out of the election. The portion of taxable income attributable to those owners is not included in the entity-level tax. An entity intending to make the election must notify all owners that are individuals, trusts, or estates and give them 60 days to opt-out of the election.

The Department of Revenue must adopt rules and prescribe forms for the entity-level tax.

Addition to Arizona gross income

An electing entity must add back to Arizona gross income any amount deducted for federal purposes for the entity-level tax and substantially similar taxes paid.

Estimated taxes

An electing entity must make estimated tax payments if its taxable income exceeds $150,000 in the preceding tax year.

Credit for entity-level tax paid

Owners of an electing entity may claim a credit for their portion of the tax paid. If the allowable credit exceeds an owner’s tax liability, the owner may carry forward the excess for up to five years.

Credit for tax paid to another state

Also, resident taxpayers may claim a credit for taxes substantially similar to the pass-through entity tax that are paid to another state. The credit cannot exceed the amount that would have been allowed if the taxpayer was taxed at the individual level and not the entity level.

Ch. 425 (H.B. 2838), Laws 2021, effective from and after December 31, 2021.


Corporate, personal income taxes: Elective pass-through entity tax enacted

California has created an elective tax that certain pass-through entities can pay on behalf of their owners. The Small Business Relief Act, included in a California budget trailer bill, provides for the new entity-level income tax. Eligible entities may make the election for tax years 2021 through 2025, unless there is a change in federal law. If the $10,000 state and local tax deduction cap applicable under federal law for 2018 through 2025 is repealed, the California entity-level tax option will become inoperative.

Eligible entities

Entities taxed as S corporations or partnerships (including limited liability companies) may make the election as long as they:

Making the election

Entities may make the election annually on an original, timely filed return. The election is irrevocable.

Tax rate

The tax is imposed at a rate of 9.3% on qualified net income. “Qualified net income” means the sum of the pro-rata shares or distributive shares of income of any of partners, shareholders or members upon their consent. A partner, shareholder, or member that does not consent does not prevent an entity from making an election to pay the elective tax.

The elective tax is in addition to, and not in place of, any other tax or fee that applies to the entity.

Payment of tax

For tax year 2021, the tax is due by the due date (without regard to any extension) of the original return that the qualified entity is required to file for the taxable year of the election.

For tax years 2022 through 2025:

If an entity does not make that first payment by June 15, it may not make the election for that tax year.

Credit for owners

Owners that consented to have their pro-rata or distributive share of income included in the calculation of the elective tax may claim a personal income tax credit in an amount equal to the elective tax paid on their behalf. If the credit allowed exceeds their net tax due, they can carry over the excess for up to five years.

Other changes in the bill will be reported separately.

Ch. 8 (A.B.150), Laws 2021, applicable as noted.


Corporate, personal income taxes: Combined reporting changes, addback requirements, other changes enacted

Colorado has enacted legislation making multiple changes to corporate and personal income taxes, including:

IRC Sec. 199A addback

Pass-through business owners who claim a federal qualified business income deduction, as allowed under IRC Sec. 199A, are required to add back the amount of the deduction to federal taxable income if their AGI exceeds $500,000 (for single filers) or $1 million (for married taxpayers filing jointly). This addition requirement, previously required for tax years 2021 and 2022, has been extended through 2025.

Itemized deductions addback

For tax years beginning on or after January 1, 2022, taxpayers with adjusted gross incomes of $400,000 or more are required to add back a portion of their federal itemized deductions when calculating their Colorado taxable income. Taxpayers filing as single are required to add back itemized deductions that exceed $30,000 in total, and taxpayers filing jointly are required to add back itemized deductions that exceed $60,000 in total.

Business meal expenses

For tax year 2022, taxpayers are required to add back to their federal taxable income an amount equal to the enhanced federal deduction for business meals when calculating their Colorado taxable income. The federal deduction for business meals was increased from 50% of the cost of the meal to 100% of the cost of the meal.

Social security income

The current deduction for pension and annuity income, including federally taxable social security income, is limited to $20,000 for taxpayers age 55 to 64, and $24,000 for taxpayers age 65 and over. Beginning in tax year 2022, the limit is increased so that all federally taxed social security income is deductible in Colorado. The current caps still apply to all other forms of pension and annuity income, and the caps may only be exceeded when social security income specifically is higher than the cap.

529 contribution deduction

For tax years beginning on or after January 1, 2022, deductions for amounts contributed to a CollegeInvest 529 account are limited to $20,000 per taxpayer per beneficiary for single filers, or $30,000 per taxpayer per beneficiary for joint filers. The limitation will be adjusted annually for inflation.

Earned income tax credit

For tax year 2022, and for tax years beginning on or after 2026, the Colorado earned income tax credit is increased from 15% to 20% of the federal credit. For tax years 2023 through 2025, the state credit is equal to 25% of the federal credit.

Child tax credit

Previously, the state child tax credit would become available if Congress enacts the Marketplace Fairness Act of 2013 or similar legislation. The law repeals the conditional availability of the credit and allows the credit to qualifying taxpayers beginning in tax year 2022. Additionally, the law extends the credit to taxpayers who would otherwise be able to claim the federal child tax credit except that one or more of their qualifying children does not have a valid social security number.

For single filers, the amount of the credit is equal to:

No credit is allowed for single filers with a federal AGI greater than $75,000.

For taxpayers filing a joint return, the amount of the credit is equal to:

No credit is allowed for joint filers with a federal AGI greater than $85,000.

If federal law is amended so that the expanded child tax credit available for tax year 2021 under the American Rescue Plan Act is extended to later tax years, then the bill reduces the state child tax credit percentages by half.

Combined reporting standard

For tax years beginning on or after January 1, 2022, the state’s current combined reporting standard (Joyce) is replaced with the Finnigan standard. Under the Finnigan rule, the combined group is treated as a single taxpayer, so if one corporation in the combined group has a nexus to Colorado, all of the affiliated corporations are considered to have a nexus to Colorado for tax liability apportionment purposes.

Tax avoidance

Effective for tax years beginning on or after January 1, 2022, corporate taxpayers must include within their combined return any affiliated corporation that is incorporated in a specified foreign jurisdiction for the purpose of tax avoidance. A corporation is presumed to be incorporated in a foreign jurisdiction for the purpose of tax avoidance if they are located in any of the listed jurisdictions, unless the taxpayer proves to the satisfaction of the Department of Revenue that the corporation is legitimately operating within the listed jurisdiction.

Capital gains

The law repeals the state income tax deduction for certain federally taxable capital gains after tax year 2021, except for qualified agricultural property. The agricultural property must have been acquired after May 8, 1994, but before June 4, 2009, and must have been owned by the taxpayer for at least five years prior to its sale. For qualifying agricultural property, the maximum deduction is limited to $100,000 per tax year.

Business conversion tax credit

The law creates an income tax credit for tax years 2022 through 2026 equal to 50% of the conversion costs for a business that converts to a worker-owned cooperative, an employee stock ownership plan, or an employee ownership trust. The maximum amount of the income tax credit is up to $25,000 when converting to a worker-owned cooperative or an employee ownership trust, and up to $100,000 when converting to an employee stock ownership plan. The Office of Economic Development and International Trade is responsible for administering the program, including advertising and reporting requirements.

Disqualified insurance companies

Disqualified insurance companies, defined as captive insurance companies with less than 50% of revenue being generated from insurance premiums in a given taxable year, are subject to the state income tax rather than the insurance premium tax.

H.B. 1311, Laws 2021, effective June 23, 2021, and applicable as noted.

Corporate, personal income taxes: Optional entity-level tax for pass-throughs enacted

Beginning in tax year 2022, Colorado will allow pass-through businesses to elect to pay their state income tax at the entity level, rather than the individual level.


Under the “SALT Parity Act,” an S corporation or partnership may make the election on their income tax return, which is binding on all electing pass-through entity owners. The election is only allowed in an income tax year where there is a federal limitation on deductions allowed to individuals under IRC Sec. 164.

Tax rate

Electing entities must pay the tax at a rate of 4.55% on the sum of:

H.B. 1327, Laws 2021, effective June 23, 2021, and applicable as noted.


Corporate income tax: Surcharge extended, capital base tax phaseout delayed

Connecticut Governor Ned Lamont signed budget legislation that:

Capital base tax phaseout

The capital base tax phaseout begins January 1, 2024 instead of January 1, 2021. Connecticut currently imposes the tax at a rate of 3.1 mills on each dollar of capital stock up to a maximum of $1 million. The tax rate decreases to:

The tax no longer applies after the 2027 tax year.

Waiver of interest

Taxpayers are not subject to interest on underpayments of estimated tax for the 2021 tax year for any additional tax due as a result of these changes.

S.B. 1202, Laws 2021, effective June 23, 2021; Press Release, Office of Connecticut Gov. Ned Lamont, June 23, 2021.


Corporate income tax: IRC conformity updated, other tax changes enacted

Florida enacted legislation that updates the IRC conformity tie-in date for computing corporate income tax liability. The legislation also requires additions to federal taxable income (FTI) for:

IRC conformity

Effective retroactively to January 1, 2021, Florida adopts the IRC as amended and in effect on January 1, 2021. The IRC conformity update means Florida follows:

Business interest expense deduction

Effective for tax years beginning after 2017, IRC Sec. 163(j) limits the business interest expense deduction for the tax year to:

The ATI limit is 50% for the 2019 and 2020 tax years. Taxpayers can carryforward the amount that is not deductible indefinitely to later tax years.

Florida does not adopt the increase in the business interest expense deduction limit. Effective for tax years beginning after December 31, 2018 and before January 1, 2021, corporate income taxpayers must addback the amount that exceeds the 30% limit. Taxpayers can carryforward and subtract the unused business interest expenses in later tax years.

Business meal expense deduction

IRC Sec. 274 limits the federal deduction for most business meal expenses to 50% of those expenses for tax years after 2017. There is an exception for business meals provided by restaurants in 2021 and 2022. Taxpayers can deduct 100% of those expenses.

The 100% business meal expense deduction does not apply to taxpayers computing Florida corporate income tax liability. Taxpayers must addback the amount that exceeds the 50% limit.

Depreciation of qualified improvement property

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) changed the depreciation recovery period for QIP from 39 years to:

The change in the recovery period made QIP eligible for federal bonus depreciation under IRC Sec. 168(k).

Florida already requires an addition to FTI for bonus depreciation. Effective for QIP placed in service on or after January 1, 2018, Florida requires an addition to federal taxable income for 100% of a taxpayer’s federal depreciation deduction for the property. It allows a subtraction from federal taxable income for depreciation computed under IRC Sec. 167 in effect on January 1, 2020 without regard to changes made by the CAREs Act.

Deduction for production expenses

Taxpayers can claim a federal deduction under IRC Sec. 181 for up to $15 million in qualified film, television, and live theater production expenses. Florida does not adopt the federal extension of the sunset date for the deduction from December 31, 2020 to December 31, 2025. Effective for tax years beginning after December 31, 2020 and before January 1, 2026, it requires an addition to federal taxable income by taxpayers that claim the deduction.

H.B. 7059, Laws 2021, effective June 29, 2021 and as noted.


Sales and use tax: Taxability of web-based computer software service discussed

The Illinois Department of Revenue (department) issued a letter ruling discussing the sales and use taxability of a web-based fleet management system provided via a “Software as a Service” (SaaS) model. Generally, a provider of SaaS is acting as a serviceman. If the provider does not transfer any tangible personal property (TPP) to the customer, then the transaction generally would not be subject to retailers’ occupation tax, use tax, service occupation tax, or service use tax. However, if the provider transfers to the customer an API, applet, desktop agent, or remote access agent to enable the customer to access the provider’s network and services, the subscriber is receiving computer software that is subject to tax. In this matter, the taxpayer provided its services via a SaaS model through which its customers access its service via the internet but have no control over the network, servers, operating systems, storage, or proprietary software used to provide the service.

Furthermore, the taxpayer developed an application that it provided to its customers free of charge so that its customers could use that to more readily upload vehicle information necessary for its fleet management. It was noted that the revenues received by the taxpayer from subscriptions of the web-based fleet management service were not subject to tax. Further, the application downloaded for free by the taxpayer’s subscribers from a server located in another state would also not be subject to tax.

General Information Letter ST 21-0001-GIL, Illinois Department of Revenue, January 15, 2021, released June 2021.


Corporate income tax: Contingent corporate tax changes will go into effect

Iowa corporate income tax changes that were possibly going into effect in 2023, if certain triggers were met, will now go into effect unconditionally.

Contingent tax changes

Some of the previously enacted contingent tax change that will now take effect January 1, 2023 include changing or eliminating the:

S.F. 619, Laws 2021, effective July 1, 2021.


Corporate income tax: 2020 Income tax returns from pass-through entities (PTEs) extended to September 15

Maryland extended the filing deadline for 2020 income tax returns from pass-through entities (PTEs) to September 15, 2021. Taxpayers who file PTE returns and pay any outstanding liabilities by September 15, 2021 will not be charged interest or pay a penalty. The extension is automatic and PTEs are not required to take any actions in order to receive the extension.

The waiver is limited to late payment interest and late payment penalty and does not apply to interest or penalty charged on the underpayment of estimated tax. PTEs that wish to request an abatement for reasonable cause of interest and penalty charges for underpayment of estimated PTE tax or for interest and penalty charges for returns filed after September 15, 2021, may submit their requests to:

Standard extensions of time to file Maryland PTE returns (November 15 for S-Corps and October 15 for all other PTEs) may be requested using Form 510E.

News Release, Maryland Department of Revenue, July 1, 2021.


Corporate, personal income taxes: Elective pass-through entity tax enacted

Massachusetts Governor Charlie Baker signed budget legislation that allows eligible pass-through entities to pay an elective excise tax on income taxable in the state.

Eligible pass-through entities

The elective pass-through entity tax applies to:

The legislation directs the Massachusetts Department of Revenue to establish rules for application of the elective tax to estates and trusts.


A pass-through entity can make the election on an annual basis. The election is binding on the owners of the electing pass-through entity. The pass-through entity cannot change the election once it is made for the tax year.

Tax Rate

The tax rate is 5%.

Credit for owners

S corporation shareholders, partners, and LLC members can claim a refundable credit for tax paid by the pass-through entity. The credit equals the owner’s proportionate share of the tax liability multiplied by 90%.

Returns and payment

Pass-through entity tax returns and payments are due:

Effective date

The elective pass-through entity tax is effective for tax years beginning on or after January 1, 2021. The tax applies until:

Ch. 24 (H.B. 4002), Laws 2021, effective July 1, 2021 and as noted; Press Release, Office of Massachusetts Gov. Charlie Baker, July 16, 2021.


Corporate, personal income taxes: Elective flow-through entity tax bill vetoed

Michigan Governor Gretchen Whitmer has vetoed a bill that would have allowed S corporations, partnerships, and limited liability companies to elect to pay tax at the entity level.

(H.B. 4288), as vetoed by Michigan Gov. Gretchen Whitmer on July 1, 2021.


Multiple taxes: PPP loan and unemployment exclusions, elective pass-through entity tax, and more enacted

An omnibus Minnesota tax bill contains significant income tax changes, including:

Federal conformity

Notwithstanding the state’s December 31, 2018, IRC tie-in date, Minnesota now adopts selected provisions of the following federal acts:

The adopted provisions relate to:

Except as noted, Minnesota adopts these provisions for the same tax years they are effective for federal purposes.

The Department of Revenue is updating tax forms and working with tax software providers to update their systems to reflect these tax law changes. Taxpayers should not file any amended returns relating to retroactive provisions in the tax bill until forms are updated. The Department will communicate when updated forms are available. Taxpayers who filed 2020 returns that included PPP loan forgiveness or unemployment compensation should wait to hear from the Department. Depending on a return’s complexity, the Department will either adjust the return and issue a refund or ask the taxpayer to amend the return. The Department will let taxpayers know what to do later this summer.

Pass-through entity tax

For tax years 2021 and after, a partnership, limited liability company, or S corporation with only individual, trust, and estate owners may elect to pay a new pass-through entity tax if:

The election is binding on all qualifying owners who have an ownership interest in the entity.

Tax amount: The tax imposed equals the sum of the tax liability of each owner, calculated by applying the highest individual tax rate. When making the tax liability calculation:

The same credits and deductions used to determine an owner’s tax liability for the pass-through entity tax must also be used to calculate the owner’s income tax liability.

Estimated tax: Estimated tax requirements apply in the same manner as for composite return filers.

Administration: Pass-through entity tax returns will generally be treated like composite returns for administrative purposes.

Credit for owners: Owners of entities electing to pay the pass-through entity tax can claim a refundable credit for their share of the amount of tax paid.

Exemption from withholding: Partnerships and S corporations are exempt from withholding tax for nonresident individual partners if they elect to pay the pass-through entity tax.

Partnership audits

Partnerships subject to a federal adjustment resulting from a partnership-level audit, except those that elect to pay their tax assessment at the entity level (discussed below), must report the federal adjustments to the state and direct partners. They must do so within 90 days of the final determination date. Within 180 days of a final adjustment, direct partners, other than tiered partners, must file a federal adjustments report of their distributive share of federal adjustments and pay any additional tax due.

Partnerships that elect to pay their tax assessment at the entity level must:

These provisions are effective retroactively for taxable years beginning after December 31, 2017, except that for partnerships that make an election, the provisions are effective retroactively and apply to the same tax periods to which the election relates.

Tax credits and deductions

Small business investment (angel) credit: The credit is extended by one year, through tax year 2022, with a limit of $5 million in credit allocations that year.

Historic structure rehabilitation credit: The credit is extended by one year, generally through fiscal year 2022.

Film production credit: For tax years 2021 through 2024, taxpayers may claim a new film production credit for 25% of eligible production costs paid in the tax year. Total credit allocations are capped at $4.95 million per taxable year. Unused credit may be carried over for five years. Taxpayers may claim the credit against the individual income tax, corporate franchise tax, or insurance premium tax.

Credit for contributions to housing investment account: For tax years 2023 through 2028, taxpayers may claim a new credit for 85% of their contributions of at least $1,000 and up to $2 million to a new housing investment account at Minnesota Housing. Taxpayers may claim the credit against the individual income tax, corporate franchise tax, or insurance premium tax.

Working family tax credit: Beginning in tax year 2021, taxpayers ages 19 to 64 (previously, 21 to 64) may claim the credit with no qualifying children.

Student loan credit: Beginning in tax year 2021, when calculating the student loan credit, an expanded definition of “earned income” will include Social Security benefits and some retirement income. Also, for married taxpayers filing a joint return, the Department of Revenue must allocate the couple’s combined adjusted gross income to each spouse based on the spouse’s percentage share of the couple’s earned income. This has the effect of reducing the marriage penalty in the credit.

Volunteer driver reimbursement: Beginning in tax year 2021, a taxpayer may subtract from income the amount of mileage reimbursement that a charitable organization pays to the taxpayer for work as a volunteer driver.

IRC Sec. 179 deduction: For tax years beginning after 2019, no state addition is required for the federal IRC Sec. 179 deduction claimed for property placed in service prior to tax year 2020, including:

Casualty losses: Clarifications related to the itemized deduction for casualty losses include the following:

Ch. 14 (H.F.9), Laws 2021, 1st Special Session, effective July 2, 2021, except as noted; Tax Law Changes, Minnesota Department of Revenue, effective as noted.


Multiple Taxes: Governor Signs Legislation Adopting Economic Nexus, Marketplace Facilitator Provisions, and Various Other Tax Changes

Missouri Governor Michael Parson signed legislation adopting sales and use tax economic nexus and marketplace facilitator provisions, as well as various other sales and use, telecommunications, and property tax changes.

Economic nexus

Effective January 1, 2023, an economic nexus standard of $100,000 is adopted. Specifically, the definition of “engaging in business activities within this state” is modified to include vendors selling tangible personal property for delivery into Missouri, provided the seller’s gross receipts from taxable sales from delivery of tangible personal property into Missouri in the previous calendar year or current calendar year exceeds $100,000. Vendors meeting such criteria are required to collect and remit use tax.

The vendor would calculate gross receipts from taxable sales at the end of each calendar quarter for the preceding 12-month period ending on the last day of the preceding calendar quarter. If the economic threshold is met, the vendor is required to collect and remit tax for at least 12 months, beginning within 3 months after the quarter’s close. The vendor would continue to collect and remit the tax for as long as it engages in business activities in, or maintains a substantial nexus with, Missouri.

In addition, current click-through nexus provisions are eliminated when the economic nexus standard becomes effective.

Marketplace facilitators

Effective January 1, 2023, marketplace facilitators that engage in business activities within Missouri must register with the Department of Revenue to collect and remit use tax on sales delivered into Missouri through the marketplace facilitator’s marketplace by or on behalf of a marketplace seller. Such retail sales include those made directly by the marketplace facilitator as well as those made by marketplace sellers through the marketplace facilitator’s marketplace.

All taxable sales made through a marketplace facilitator’s marketplace by or on behalf of a marketplace seller will be deemed to be consummated at the location in Missouri to which the item is shipped or delivered, or at which possession is taken by the purchaser.

Marketplace-related definitions

A “marketplace facilitator” is a person that:

A marketplace facilitator does not include a person who provides:

A “marketplace seller” is a seller that makes sales through any electronic marketplace operated by a marketplace facilitator.

Records: Marketplace facilitators must maintain records of all sales delivered to a location in Missouri, including electronic or paper copies of invoices showing the purchaser, address, purchase amount, and use tax collected. Such records must be made available for review and inspection upon request by the department.

Discounts:Marketplace facilitators properly collecting and remitting use tax in a timely manner will be eligible for any discount provided for under current law.

Statement or invoice: A marketplace facilitator must separately state on an invoice provided to a purchaser the use tax collected and remitted on behalf of a marketplace seller.

Purchaser liability: Nothing relieves a purchaser of the obligation to remit use tax for any taxable retail sale for which a marketplace facilitator or marketplace seller does not collect and remit the use tax.

Class action lawsuits: No class action can be brought against a marketplace facilitator in any court in Missouri on behalf of purchasers arising from or in any way related to an overpayment of sales or use tax collected on retail sales facilitated by a marketplace facilitator, regardless of whether that claim is characterized as a tax refund claim.

Sales and use tax filing thresholds

The statutory thresholds for the sales tax monthly, quarterly, and annual filing periods are modified as follows:

Sales tax holidays

The back-to-school and Show Me Green sales tax holidays are modified by repealing the ability for political subdivisions to opt out of the sales tax holidays, and by defining how the sales tax exemption applies to the purchase or return of certain items, effective January 1, 2023. For instance, it defines how the exemption applies to:

Also, where a purchaser and seller are located in two different time zones, the time zone of the seller’s location determines the authorized exemption period.

Sales and use tax mapping

The department is required to add use tax information to the existing sales tax mapping feature on its website that displays sales tax information of political subdivisions that have taxing authority. Political subdivisions collecting a use tax must send such data to the department by January 1, 2022, and the department will implement the mapping feature using the use tax data by July 1, 2022. Also, the legislation requires the mapping feature to show the total of combined rates of overlapping taxing jurisdictions by July 1, 2022.

Other sales and use tax administration provisions

The legislation also provides for various sales and use tax administrative provisions, including the following that are all effective January 1, 2023:

Local use taxes

The legislation makes the following changes with regard to local use taxes:

Satellite or streaming video services

The legislation modifies provisions relating to communications services offered in political subdivisions by doing the following:

Property taxation of aircraft

The taxation of aircraft for property tax purposes is changed. Current law requires aircraft which are at least 25 years old, used solely for noncommercial purposes, and operated less than 50 hours per year to be assessed at 5% of true value. This legislation changes the operating hours requirement to 200 hours per year.

S.B. 153, Laws 2021, effective August 28, 2021, except as noted; Press Release, Missouri Gov. Mike Parson, June 30, 2021.


Corporate, personal income taxes: Individual rate cut, minimum CAT computation amended

More information on the tax changes that were enacted in Ohio’s biennial budget bill can be found here.

Ohio’s enacted budget includes:

Estate tax rate

For tax years beginning on or after January 1, 2021, estates the tax is now levied at the rate of 1.38462% for the first $25,000 of income. Previously, the tax rate was 1.42744% for the first $21,000.

Individual income tax rate

The rate on nonbusiness income is reduced. Previously, the rates ranged from 2.850% to 4.797%, after January 1, 2021 the rates will range from 2.765% to 3.990%.

For income:

Further, Ohio will not make inflation indexing adjustments in 2021 to the income tax brackets. Ohio will also not make adjustments in 2021 or 2022 to the personal exemption amount. The changes are effective for tax years beginning on or after January 1, 2021.

Credits and deductions

Ohio will allow deductions for:

For credits, the law provides for:

CAT minimum tax

The minimum commercial activity tax (CAT) will now be computed based on the taxpayer’s taxable gross receipts reported in the preceding year, rather than the current year.

The legislation can be viewed on the legislature’s website.

H.B. 110, Laws 2021, effective 91 days after filing with the Secretary of State.

The information provided in this alert is only a general summary and is being distributed with the understanding that Plante & Moran, PLLC, is not rendering legal, tax, accounting, or other professional advice, position, or opinions on specific facts or matters and, accordingly, assumes no liability whatsoever in connection with its use.

©2021 CCH Incorporated and its affiliates. All rights reserved.

Related Thinking

Business professional walking down the street while checking his cellphone.
June 25, 2021

State and local tax advisor: June 2021

Article 19 min read
Businessman working in casual clothes in a modern home office.
May 26, 2021

State and local tax advisor: May 2021

Article 23 min read
Businesswoman working from home at her kitchen table in casual clothes.
April 27, 2021

State and local tax advisor: April 2021

Article 36 min read