The states covered in this issue of our monthly tax advisor include:
California
Corporate income tax: Sourcing regulation for sales other than sales of tangible personal property amended
The California Franchise Tax Board has amended a regulation governing the sourcing of sales other than the sales of tangible personal property when apportioning business income for tax purposes. Changes to the regulation include:
- Clarifying existing rules for sales of services and creating specific rules for certain service industries.
- Providing clarifying amendments and examples for sales of intangible property.
- Providing new rules for sales that are a blend of services and intangible property.
- Providing clarifying amendments for sales of marketable securities.
- Defining and clarifying key terms used in the regulation.
Reg. 25136-2, California Franchise Tax Board, effective Oct. 1, 2025, and applicable to taxable years beginning on or after Jan. 1, 2026.
Corporate, personal income taxes: 2025 rate schedules, filing thresholds, other adjusted figures released
The California Franchise Tax Board has released indexed income tax figures for the 2025 taxable year, based on a 3% inflation rate from June 2024 through June 2025. The indexes values relate to:
- Personal income tax rates.
- Return filing thresholds.
- Standard deduction.
- Personal exemptions.
- Itemized deduction reduction and personal exemption phaseout thresholds.
- Alternative minimum tax (AMT) exemption.
- Miscellaneous credits.
- Doing business thresholds.
- Automobile depreciation deduction limitations.
- Individual shared responsibility penalty.
- Taxpayers’ Rights Advocate relief.
Personal income tax rates
For 2025, the indexed personal income tax rates for single taxpayers and married taxpayers filing separately range from 1.0% of the first $11,079 of taxable income (formerly, $10,756 for 2024) to 12.3% of taxable income that is $742,953 and over (formerly, $721,314 and over for 2024).
For married taxpayers filing jointly and surviving spouses with a dependent child, the rates range from 1.0% of the first $22,158 of taxable income (formerly, $21,512 for 2024) to 12.3% of taxable income that is $1,485,906 and over (formerly, $1,442,628 and over for 2024).
For taxpayers filing as heads of households, the rates range from 1.0% of the first $22,173 of taxable income (formerly, $21,527 for 2024) to 12.3% of taxable income that is $1,010,417 and over (formerly, $980,987 and over for 2024).
Return filing thresholds
For 2025, a single taxpayer or head of household taxpayer must file a return if the taxpayer’s adjusted gross income (AGI) exceeds an amount ranging from $18,353 to $47,378 (formerly, $17,818 to $46,013 for 2024) or if the taxpayer’s gross income exceeds an amount ranging from $22,941 to $51,966 (formerly, $22,273 to $50,468 for 2024).
The corresponding AGI and gross income thresholds requiring married couples to file a return range from $36,711 to $73,386 (formerly, $35,642 to $71,287 for 2024) and from $45,887 to $82,562 (formerly, $44,550 to $80,195 for 2024), respectively.
A surviving spouse taxpayer must file a return if the taxpayer’s AGI exceeds an amount ranging from $18,353 to $47,378 (formerly, $33,185 to $46,013 for 2024) or if the taxpayer’s gross income exceeds an amount ranging from $22,941 to $51,966 (formerly, $37,640 to $50,468 for 2024).
The number of dependents and the taxpayer’s age (under 65 and 65 or older) determine the filing threshold level that applies.
The tax threshold (the income level at which a person begins paying income taxes based on the tax rate schedule) has risen for 2025 to an AGI of $18,896 (formerly, $18,368 for 2024) for single or separate taxpayers and to $37,841 (formerly, $36,736 for 2024) for joint, surviving spouse, and unmarried head of household taxpayers.
Standard deduction
The standard deduction increases for 2025 to $5,706 (formerly, $5,540 for 2024) for single taxpayers and married taxpayers filing separate returns and to $11,412 (formerly, $11,080 for 2024) for married taxpayers filing jointly, surviving spouses, and heads of households.
Personal exemptions
The personal exemption credits increase for 2025 to $153 (formerly, $149 for 2024) for single taxpayers, married taxpayers filing separately, and heads of households and to $307 (formerly, $298 for 2024) for married taxpayers filing jointly and surviving spouses. The personal exemption amount for dependents increases to $475 (formerly, $461 for 2024).
Itemized deduction reduction and personal exemption phaseout thresholds
The AGI thresholds that activate the reduction of itemized deductions and the phaseout of personal exemption credits for 2025 are:
- $252,203 for single taxpayers and married taxpayers filing separately (formerly, $244,857 for 2024).
- $504,411 for married taxpayers filing jointly and surviving spouses (formerly, $489,719 for 2024).
- $378,310 for heads of households (formerly, $367,291 for 2024).
AMT exemption
The AMT exemption amounts for 2025 increase to:
- $92,749 (formerly, $90,048 for 2024) for single or unmarried taxpayers.
- $61,830 (formerly, $60,029 for 2024) for married taxpayers filing separately and estates and trusts.
- $123,667 (formerly, $120,065 for 2024) for married taxpayers filing jointly and surviving spouses.
Exemption phaseouts begin at the following alternative minimum taxable income levels for 2025:
- $347,808 (formerly, $337,678 for 2024) for single or unmarried taxpayers.
- $231,868 (formerly, $225,115 for 2024) for married taxpayers filing separately and estates and trusts.
- $463,745 (formerly, $450,238 for 2024) for married taxpayers filing jointly and surviving spouses.
The special exemption limit for certain children under 24 in the calculation of AMT for 2025 is the child’s earned income plus $9,750 (formerly, $9,450 for 2024).
Miscellaneous credits
The renter’s credit for 2025 will be available for single filers with AGIs of $53,994 or less (formerly, $52,421 or less for 2024) and for joint filers with AGIs of $107,987 or less (formerly, $104,842 or less for 2024).
The joint custody head of household credit and the dependent parent credit increase for 2025 to the lesser of $610 (formerly, $592 for 2024) or 30% of net tax.
The qualified senior head of household credit increases for 2025 to 2% of taxable income of up to $98,652 (formerly, $95,779 for 2024), up to a $1,860 (formerly, $1,806 for 2024) maximum credit amount.
For 2025, the California earned income tax credit will generally be available to households with AGI of less than $32,901 (formerly, $31,951 for 2024) regardless of whether the household has a qualifying child. No credit is allowed if the aggregate amount of investment income of a qualified taxpayer for the taxable year exceeds a specific amount. For taxable year 2025, that adjusted amount is $4,814 (formerly, $4,674 for 2024).
The maximum young child and foster youth tax credits for 2025 are $1,189 (formerly, $1,154 for 2024). The credits are reduced if the taxpayer’s earned income exceeds a threshold amount.
Doing business thresholds
The property, payroll, and sales factor thresholds for determining whether a taxpayer is doing business in California for 2025 are:
- Sales in California exceeding the lesser of $757,070 (formerly, $735,019 for 2024) or 25% of the total sales.
- Real property and tangible personal property in California exceeding the lesser of $75,707 (formerly, $73,502 for 2024) or 25% of the total real property and tangible personal property.
- Compensation paid in California exceeding the lesser of $75,707 (formerly, $73,502 for 2024) or 25% of the total compensation paid.
Automobile depreciation deduction limitations
The depreciation limitations for passenger automobiles (that aren’t trucks or vans) placed in service in 2025 for which the IRC Section 168(k) additional first year depreciation deduction doesn’t apply are:
- First tax year: $3,860 (unchanged from $3,860 for automobiles placed in service in 2024).
- Second tax year: $6,100 (decreased from $6,200 for automobiles placed in service in 2024).
- Third tax year: $3,650 (decreased from $3,750 for automobiles placed in service in 2024).
- Each succeeding year: $2,175 (decreased from $2,275 for automobiles placed in service in 2024).
The depreciation limitations for trucks and vans placed in service in 2025 for which the IRC Section 168(k) additional first year depreciation deduction doesn’t apply are:
- First tax year: $4,360 (unchanged from $4,360 for trucks and vans placed in service in 2024).
- Second tax year: $6,900 (decreased from $7,000 for trucks and vans placed in service in 2024).
- Third tax year: $4,150 (unchanged from $4,150 for trucks and vans placed in service in 2024).
- Each succeeding year: $2,475 (unchanged from $2,475 for trucks and vans placed in service in 2024).
The FTB also provides indexed lease inclusion amounts.
Individual shared responsibility penalty
For 2025, the applicable dollar amount on which the individual shared responsibility penalty for adults is based is $950 (formerly, $900 for 2024). The actual amount of the penalty imposed on an uninsured individual for a month could be different from the applicable dollar amount, taking into account various factors.
Taxpayers’ rights advocate relief
For 2025, the Taxpayers’ Rights Advocate may grant a taxpayer up to $14,100 (formerly, $13,700 for 2024) in equitable relief from penalties, fees, additions to tax, or interest.
Memorandum, California Franchise Tax Board, Aug. 29, 2025.
Corporate, personal income taxes: Legislature approves IRC conformity bill
The California Legislature has approved a bill that would update the state’s Internal Revenue Code (IRC) conformity date to Jan. 1, 2025, for taxable years beginning on or after Jan. 1, 2025, with specified exceptions and modifications. If signed by the governor, it would incorporate into state law numerous changes made by Congress to the IRC in the last 10 years. California’s current IRC tie-in date is Jan. 1, 2015, for taxable years beginning on or after Jan. 1, 2015. The Senate approved the bill two days after the Assembly approved it.
S.B. 711, as passed by the California Legislature on Sept. 11, 2025.
Plante Moran note: If the current IRC is adopted, there could be significant changes to a taxpayer’s California income. For example, California doesn’t follow Section 174 or 163(j) based on its current adoption of the IRC.
Colorado
Corporate income tax: Changes related to corporations and foreign jurisdictions enacted
Colorado has enacted legislation that makes several income tax changes for corporations with an international presence. The changes include:
- Requiring an addition to taxable income for state tax purposes in an amount equal to the federal deduction claimed for foreign-derived deduction-eligible income (FDDEI) under IRC Section 250, beginning with tax year 2026.
- Allowing the executive director of the Department of Revenue to use discretion to determine whether a member of an affiliated group of corporations is incorporated in a foreign jurisdiction for reasons of economic substance.
- Adding Hong Kong, Ireland, Liechtenstein, Netherlands, and Singapore to the list of foreign jurisdictions in which corporations are presumed to incorporate for the purpose of tax avoidance, beginning with tax year 2026.
- Expanding the subtraction from income for amounts treated as a Section 78 dividend under IRC Section 78, by eliminating the provision that made the subtraction inapplicable to amounts received from a C corporation incorporated in a foreign jurisdiction for the purpose of tax avoidance.
Ch. 6 (H.B. 1002), Laws 2025, First Extraordinary Session, effective Aug. 28, 2025.
Corporate income, insurance taxes: Sale of tax credits authorized
Beginning in fiscal year 2025-26, the Colorado Department of the Treasury may sell insurance premium tax credits to insurance companies and income tax credits to C corporations that do business in Colorado. The department may issue tax credit certificates pursuant to this authority equal to the lesser of (1) $125 million in total certificate face value or (2) $100 million in total sales proceeds, plus any reasonable and necessary administrative costs associated with the issuance of the credits. The department must offer insurance companies that qualify as a regional home office in the state the first right to purchase these tax credits.
The department, in consultation with the Governor’s Office of State Planning and Budget, may determine the years in which a taxpayer may claim the credit. The credit claimed in any one year must not exceed the taxpayer’s tax liability for the year. Excess credit isn’t refundable but may be carried forward and be claimed in subsequent years, except that the credit cannot be carried forward to any taxable year that begins after Dec. 31, 2033.
Ch. 8 (H.B. 1004), Laws 2025, First Extraordinary Session, effective Aug. 28, 2025.
Illinois
Multiple taxes: Tax amnesty guidance issued
Illinois issued guidance on the tax amnesty program from Oct. 1 through Nov. 15, 2025, for outstanding tax liabilities from periods ending after June 30, 2018, and before July 1, 2024. The state will waive penalties and interest for taxpayers who pay all outstanding tax liabilities during the amnesty period. The guidance covers:
- Taxes and penalties excluded from the program.
- Reporting and documentation requirements.
- Payment options.
- Use of tax credits, net operating losses, verified overpayment or credit memorandum, and refunds.
- Eligibility for taxpayers with pending audits, appeals, administrative hearings, and civil cases or federal bankruptcy protection.
Informational Bulletin FY 2026-01, Illinois Department of Revenue, August 2025.
Indiana
Sales and use tax: Chatbot generative AI offered through web access or API is a service not subject to tax
Chatbot generative artificial intelligence (AI) that’s offered to customers through web access or an application programming interface (API) is considered a service and isn’t subject to Indiana sales and use tax.
Access to chatbot
The software that operates the chatbot is never downloaded onto a customer’s computer. Rather, a customer accesses the chatbot through the taxpayer’s website or free app. In addition, customers can use the chatbot’s API product, which enables them to integrate advanced language understanding and generation capabilities in their own applications. Customers must register on the taxpayer’s platform and obtain an API key to access the taxpayer’s chatbot API. The taxpayer doesn’t deliver, electronically or physically, any software or programming code to customers.
Indiana law
Under Indiana law, separately stated labor/services aren’t subject to sales tax. Sales tax is imposed on the retail transaction of tangible personal property and specifically enumerated services, such as utilities and canned software. The term “prewritten computer software,” including prewritten upgrades, is computer software that’s not designed nor developed by the author or other creator to the specifications of a specific purchaser. Charges for accessing prewritten computer software electronically via the internet where no permanent ownership interest, control, or possession in the software is acquired, are not subject to sales tax.
Sales and use tax is imposed on products transferred electronically only if the products meet the definition of specified digital products. “Specific digital products” mean electronically transferred digital audio works, digital audiovisual works, or digital books. “Digital audio works” mean work that results from the fixation of a series of musical, spoken, or other sounds, including ringtones. “Digital audiovisual works” are defined as a series of related images that, when shown in succession, impart an impression of motion, together with accompanying sounds, if any. “Digital books” are works that are generally recognized in the ordinary and usual sense as books.
Indiana law provides that a person is engaged in making a retail transaction when the person: (1) electronically transfers specified digital products to an end-user; and (2) grants the end-user the right of permanent use of specified digital products that is not conditioned on continued payment by the purchaser.
Chatbot AI services
The chatbot AI services provided by the taxpayer are considered a service. Since the AI is accessed electronically with no permanent ownership aspect, the AI is not subject to sales tax. The taxpayer’s customers access the chatbot through web access or through open-sourced API. Customers have no permanent ownership of the chatbot. The chatbot AI services are not subject to sales tax since they don’t meet the definition of “prewritten software” or “specifically enumerated digital products.”
Revenue Ruling No. 2025-02-RST, Indiana Department of Revenue, July 23, 2025, posted Aug. 20, 2025, by Legislative Services Agency.
Michigan
Corporate income tax: Limited relief for taxpayers that elected into flow-through entity tax prior to One, Big, Beautiful Bill Act
The Michigan Department of Treasury has announced it will provide limited relief for taxpayers that made elections into the flow-through entity (FTE) tax prior to the passage of the One, Big, Beautiful Bill Act. The income tax statute permits flow-through entities to elect into the FTE by making payment on or before the last day of the ninth month after the end of the tax year. Treasury is offering limited relief by permitting taxpayers to request a refund of those payments. A taxpayer that receives a refund will not be considered to have made a valid election for that tax year and will not be subject to the requirements of the FTE tax.
The relief is subject to the following conditions:
- Only taxpayers electing into the first year of the three-year FTE election period qualify.
- Only taxpayers that have not yet filed their annual FTE return are eligible.
- Requests for relief must be submitted before the end of the election window for the applicable tax year (e.g. September 30th for calendar year filers).
Requests for relief must be mailed to the department with the following information: taxpayer’s entity name, address, federal employee identification number (FEIN), tax year, payments amount, and payment confirmation number.
Notice, Michigan Department of Treasury, Sept. 15, 2025.
Personal income, sales and use taxes: Warning issued on text message scam
The Michigan Department of Treasury has warned taxpayers that a text message scam is circulating that requests their personal banking information. The message claims that a refund has been processed and that payment information must be submitted or the refund will be forfeited. If a taxpayer has questions about an outstanding refund, they should contact the department.
News Release, Michigan Department of Treasury, Sept. 15, 2025.
Minnesota
Corporate income tax: Alternative apportionment method upheld
The Minnesota Supreme Court affirmed the tax court’s decision to uphold the Commissioner of Revenue’s use of an alternative corporation franchise tax apportionment method, finding the default apportionment method under Minnesota law did not fairly reflect the taxpayer’s Minnesota activities. The tax court determined that including gross receipts from forward exchange contract (FEC) transactions (a hedging technique used by the taxpayer to protect its outstanding balances from foreign currency exchange risks) in the general apportionment formula distorted the taxpayer’s income allocable to Minnesota, because FEC transactions were qualitatively different from the taxpayer’s principal business activities and produced significant quantitative distortion. Further, the Commissioner’s alternative apportionment method fairly reflected the taxpayer’s income by excluding gross receipts from FEC transactions and including net income from these transactions instead.
E. I. duPont de Nemours and Co. & Subsidiaries v. Commissioner of Revenue, MNSCt, No. A24-1601, Aug. 27, 2025.
Missouri
Corporate, personal income taxes: Reminder issued on elimination of tax on capital gains
The Missouri Department of Revenue issued a reminder on previously enacted legislation that eliminates income tax on capital gains for individuals and provides a path for corporations in Missouri to do so, as well. Specifically, the key provisions are:
- For individuals: Effective Jan. 1, 2025, individuals can deduct 100% of all capital gains reported for federal income tax purposes when calculating their Missouri adjusted gross income. This applies to both short-term and long-term capital gains from assets such as stocks, real estate, and cryptocurrency.
- For corporations: Corporations can deduct 100% of capital gains from their federal taxable income when the top individual income tax rate in Missouri falls to 4.5% or lower. The corporate subtraction would take effect in the tax year following the year in which this rate reduction occurs. For 2025, the top individual income tax rate is 4.7%, meaning corporations will not be eligible for the deduction in tax year 2025.
News Release, Missouri Department of Revenue, Aug. 26, 2025.
Nebraska
Corporate, personal income taxes: Report issued on impact of One, Big, Beautiful Bill Act on state revenue
The Nebraska Department of Revenue has issued a report on the impact of changes to the Internal Revenue Code (IRC) from enactment of the One, Big, Beautiful Bill Act on state income tax receipts.
Individual income tax
The following federal amendments don’t have an impact on Nebraska individual income tax receipts:
- Deductions for tip income, overtime income, and car loan interest.
- Increase to child tax credit.
- Refundability of adoption tax credit.
The following federal amendments will impact Nebraska’s tax receipts:
- Limitation on itemized deduction for state and local taxes.
- Full expensing for certain business property, domestic research, and experimental expenditures.
- Increase in dollar limitations for expensing certain depreciable business assets.
- Special depreciation allowance for qualified production property.
- Excess business loss limitation.
- Increase in child and dependent care tax credit percentage.
- Increase to employer-provided dependent care assistance exclusion.
Corporate income tax
The amendments to the limitation on the business interest expense deduction, foreign tax credit limitation, and changes to GILTI (global intangible low-taxed income) and FDII (foreign-derived intangible income), reduce federal taxable income for multinational corporations and decrease Nebraska’s corporation income tax receipts.
Effects of the One Big Beautiful Bill Act on the State of Nebraska’s Tax Revenue, Nebraska Department of Revenue, Sept. 2, 2025.
Washington
Sales and use tax: Interim guidance provided on taxability of information technology services
The Washington Department of Revenue has issued interim guidance on the applicability of retail sales tax and retailing business and occupation (B&O) tax to information technology services effective Oct. 1, 2025.
Tax treatment of IT services
The department considers services that support or assist information technology infrastructure to be taxable as an IT service. IT services include the following types of activities:
- Support activities such as phone consulting, help desk services, and remote training related to network hardware or software.
- Services that provide network diagnostic, analysis, advisory support, quality assurance testing, localization services, network information logistics, and maintenance support services:
- Onboarding and offboarding services.
- Managed IT services, including infrastructure network configuration.
- Consulting or project management services.
- Project management and technical program manager services that manage engineers and consultants.
- Migrating services and support.
- Consulting and support services in connection with digital products.
- Services that troubleshoot hardware and software issues.
- Network security management and implementation of network security strategies.
Sourcing
IT services are sourced based on the location where the services are received. If the purchaser receives the IT services at multiple known locations, the services are sourced and allocated to those locations. The department will accept proportional allocation to each known location based on the amount of the service received at each location or equal proportional allocation to the known locations. The seller and purchaser may allocate the sale to multiple locations based on a reasonable and consistent method. The agreed-upon allocation must be provided by the time of the invoice. If the location of receipt is not known, the service is deemed to be received at the business address of the client. If this information is not known, the service is received at the purchaser’s billing address.
Reselling of IT services
The seller of IT services may provide a reseller permit to a third-party subcontractor to document that it is purchasing the subcontractor’s services for resale if both of the following conditions are met:
- The seller of the IT services is contractually responsible for providing the services to a third-party buyer.
- The seller of the IT services has no intervening use of the services provided by the third-party subcontractor.
The seller of IT services that provides a reseller permit to a subcontractor need not pay retail sales tax. However, the subcontractor will need to report the sale under the wholesaling B&O classification.
MPU exemption
If a service meets the definition of a digital automated service (DAS), it’s eligible for retail sales and use tax exemptions, including the multiple points of use (MPU) exemption. The department hasn’t received any feedback relating to whether any IT services meet the definition of DAS. Therefore, sellers and their customers need to make this determination.
Nonprofit organizations
Nonprofit organizations are taxed like any other business in Washington. Consequently, nonprofits must collect sales tax when making retail sales of IT services and must pay sales tax when purchasing IT services.
Sales between members of an affiliated group
The sale of IT services, when sold between members of an affiliated group, is excluded from the definition of “retail sale.” These services would be subject to the service and other activities B&O tax classification.
Interim Guidance Statement Regarding Changes Made by ESSB 5814 For Information Technology Services, Washington Department of Revenue, Sept. 12, 2025.
Sales and use tax: Interim guidance issued on changes to digital automated services exclusions
For retail sales tax and retailing business and occupation (B&O) tax purposes, the Washington Department of Revenue has issued interim guidance on the elimination of general digital automated services (DAS) exclusions for services that involve primarily human effort, live presentations, advertising, and data processing that take effect on Oct. 1, 2025. These exclusions still apply for sales between members of an affiliated group.
DAS and professional services
The department has concluded that the legislature did not intend professional services to be taxable solely due to the representation of those services being made electronically available through a digital automated service. Professional service providers that use a digital product to communicate the results of their services are considered to be providing professional services, and not DAS. The department will consider the following factors in determining whether a digital product is only used to communicate the results of professional services:
- The digital product isn’t used by the purchaser to perform the professional service.
- The price for the professional services is known to the purchaser at the time of purchase, and the price doesn’t change depending on whether the digital product is available to the purchaser.
- The digital product isn’t available for purchase and is not marketed to the purchaser as a product.
- There is no charge for the digital product.
DAS and data processing
The exclusion from DAS for data processing is eliminated effective Oct. 1, 2025, and makes data processing subject to retail sales tax and retailing B&O tax. However, if a taxpayer sells a product or service that meets the definition of another B&O classification or DAS exclusion, the department will consider that classification to apply, even if it includes elements of data processing.
Digital features added to existing products
Adding digital features to a taxpayer’s business activities or products may impact tax treatment. The department advises that if a taxpayer begins transferring a product or service electronically or adds new digital features to an electronically transferred product, they should evaluate whether that product now qualifies as a digital product subject to retailing B&O tax and retail sales tax.
Interim Guidance Statement Regarding Changes Made by ESSB 5814 to DAS Exclusions and the Definition of “Retail Sale,” Washington Department of Revenue, Sept. 12, 2025.
Sales and use tax: Guidance issued regarding service contracts entered into prior to Oct. 1, 2025
The Washington Department of Revenue has issued guidance on the excise tax reporting requirements for taxpayers with existing contracts that were executed prior to Oct. 1, 2025, and which are impacted by S.B. 5814. This legislation (effective Oct. 1, 2025) made a range of services subject to retail sales tax and retailing business and occupation (B&O) tax.
For an existing contract with a contract price that was paid prior to Oct. 1, 2025, but provides services after this date, the department considers the sale to have occurred before Oct. 1, 2025. Therefore, the transaction is not subject to retailing B&O tax or retail sales tax but instead is subject to the tax classification in place before the enactment of S.B. 5814.
For an existing contract that has not been paid and whose terms remains unaltered after the legislative effective date, the department will accept reporting under the tax classification that applied prior Oct. 1, 2025. This tax treatment may continue through March 31, 2026. However, if a taxpayer elects to report and pay under the retailing B&O tax classification, it must also collect and remit retail sales tax on those transactions.
An existing contract that alters its terms after Oct. 1, 2025, is subject to retailing B&O tax and retail sales tax at the time of the alteration. A contract is considered altered if changes include: (i) change of parties to the contract; (ii) changes to the underlying contract activities; (iii) updates to terms that impact parties' rights or responsibilities; and (iv) updates relating to the contractual term, amount, or period.
Interim Guidance Statement Regarding Contracts Existing Prior to Oct. 1, 2025, Washington Department of Revenue, Aug. 29, 2025.
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.
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