State and local tax advisor: April 2026

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

• Georgia
• Indiana
• Kentucky
• Maine
• Maryland
• Michigan
• New Mexico
• New York
• Oregon
• Texas
• Washington
• Wisconsin

Georgia

Multiple taxes: IRC conformity updated and motor fuels tax suspended

Georgia has enacted legislation updating its corporate and personal income tax Internal Revenue Code (IRC) conformity date, and also temporarily suspended the collection of the motor fuels tax.

IRC conformity

The new IRC conformity date incorporates federal tax law changed enacted on or before Jan. 1, 2026. The updated conformity date is applicable to all taxable years beginning on or after Jan. 1, 2025.

Specific IRC provisions

• State and local tax (SALT) caps. Georgia’s state and local tax (SALT) deduction cap remains at $10,000, and doesn’t conform to the new federal $40,000 cap.
• Tips and overtime. Georgia hasn’t conformed to the new federal provisions that eliminate taxes on tips or overtime pay.
• Low-income housing tax credit (LIHTC). Georgia will partially conform to federal LIHTC rules (IRC Section 42), but has set an annual cap of $100 million in credits from 2026 through 2028.
• Additional individual conformity provisions. Georgia’s conformity legislation also includes several provisions affecting individuals, including:
  • Limiting casualty loss deductions to those arising from federally declared disaster events.
  • Removing the availability of miscellaneous itemized deductions.
  • Replacing the previous limitation on higher-income taxpayers’ itemized deductions with a new cap on the overall tax benefit those deductions may generate.
  • Adopting federal provisions that exclude employer-provided student loan repayment assistance from taxable income.
  • Updating the thresholds applicable to charitable contribution deductions for itemizing taxpayers.
  • Aligning with federal enhancements to the exclusion rules applicable to qualified small business stock.
• Additional business conformity provisions. The legislation conforms to federal corporate charitable contribution limitation rules, but it declines to follow several federal business tax provisions, including:
  • Not conforming to federal full expensing under IRC Section 168(k).
  • Not conforming to federal research and experimental expenditure capitalization rules, with Georgia continuing to apply pre-TCJA full-expensing treatment.
  • Not conforming to federal business interest-limitation provisions under IRC Section 163(j).
  • Partially conforming to IRC Section 179 expensing limitations.
  • Not conforming to federal special depreciation allowance rules.

Tax suspension on motor fuels

Additionally, the collection of motor fuels tax has been suspended for 60 days.

Ch. 375 (H.B. 1199), Laws 2026, effective March 20, 2026, and applicable to all taxable years beginning on or after Jan. 1, 2026.

Indiana

Multiple taxes: Department updates tax amnesty 2026 dates

The Indiana Department of Revenue has updated the dates of the 2026 tax amnesty program. In partnership with the United Collection Bureau (UCB), the department will conduct a tax amnesty program from July 15, 2026, through Sept. 9, 2026. Formerly, the department stated the amnesty program would run from July 15, 2026, through Sept. 15, 2026. The department advises taxpayers to disregard the previous dates that were listed in a tax bulletin, and points taxpayers to the amnesty page on the department’s website: Tax Amnesty 2026.

A tax amnesty eligibility lookup tool will be available May 18, 2026, which will allow taxpayers to determine if they have any eligible liabilities. During the amnesty period, taxpayers have a limited time opportunity to pay past due, eligible taxes and receive a waiver of related penalties, interest, and collection fees. Liabilities for all listed taxes managed by the department and owed for tax periods ending before Jan. 1, 2024, are eligible. Individuals and businesses that participated in either the 2005 or 2015 amnesty programs are ineligible for tax amnesty 2026.

Tax Bulletin, Indiana Department of Revenue, April 6, 2026; Communication, Indiana Department of Revenue, April 7, 2026.

Kentucky

Multiple taxes: IRC conformity tie-in date updated, other significant changes enacted

The Kentucky General Assembly voted to override Gov. Andy Beshear’s line-item vetoes in a tax package that:

• Eliminates the 200-transaction economic nexus threshold for determining if marketplace providers and remote retailers must collect and pay sales and use tax, effective beginning Aug. 1, 2026.
• Updates the Internal Revenue Code tie-in date for computing corporation and personal income tax liability to Dec. 31, 2025, for tax years beginning on or after Jan. 1, 2026.
• Requires corporation and personal income tax addbacks for the federal deduction of domestic research or experimental expenditures under IRC Section 174A, effective beginning with the 2026 tax year.
• Allows corporation and personal income tax subtraction adjustments for domestic research or experimental expenditures under IRC Section 174, as that section existed on Dec. 31, 2024, effective beginning with the 2026 tax year.
• Requires corporation and personal income tax addbacks for the federal deductions of film, television, theatrical, or sound recording production expenses under IRC Section 181 and interest from loans secured by rural or agricultural real property under IRC Section 139L.
• Limits the individual income tax deduction for mortgage interest under IRC Section 163(h)(3) to one home, effective beginning with the 2026 tax year.
• Decouples from individual income tax deductions for tips under IRC Section 224, overtime compensation under IRC Section 225, and passenger vehicle loan interest under IRC Section 163(h)(4).
• Requires corporation income taxpayers to determine limits on the business interest deduction under IRC Section 163(j), as that section existed on Dec. 31, 2024.
• Delays the deferred tax deduction for combined reporting groups until Jan. 1, 2028.
• Creates a 12% excise tax on the gross receipts of fantasy sports contest operators, effective beginning Jan. 1, 2027.
• Imposes sales and use tax on data brokering services, effective beginning Aug. 1, 2026.
• Extends the $2 new motor vehicle tire fee until July 1, 2034.
• Implements a $.05 rounding rule for cash transactions if pennies are not available to complete the transaction.
• Ends the severance tax exemption for fluorspar.
• Changes the notice requirements for third-party purchasers of tax delinquent property.
• Establishes a 6% tax on premium cigars and expands the definition “vending machine operator” to include cigarettes, tobacco products, vapor products, or any combination of those items.
• Extends the sales and use tax exemptions for filming and producing motion pictures in the state until July 1, 2030.
• Removes the limited liability entity tax (LLET), sales and use tax, and property tax exemptions for fluidized bed energy production facilities in the state.
• Extends the Dec. 31, 2026, application deadline for agricultural sales and use tax exemption license numbers for six months.
• Sunsets income tax and LLET credits for hiring unemployed state residents, farm operation networking (FON) projects, and employers who assist employees with completing GED programs, effective beginning Jan. 1, 2028.
• Effective beginning April 30, 2026, modifies the distribution of income tax, LLET, and bank franchise tax credits for historic rehabilitation of property, including a new credit for affordable housing, expands the credit to insurance premiums taxpayers, and establishes two rounds of credit applications.
• Imposes a 14.25% excise tax on prediction market operators, effective beginning Jan. 1, 2027.
• Places new restrictions on the taxing authority of local boards of education and school districts, effective beginning with the 2027 tax year.
• Extends the severance tax refund for coal transported directly to a market outside of United States until July 1, 2028.
• Clarifies and expands the definition of “religious institution” for purposes of sales and use tax exemption eligibility, effective beginning Aug. 1, 2026.
• Provides tax exemptions to property owned or leased by the Kentucky Housing Corporation and to property owned or leased under public-private partnership agreements or projects, effective beginning Jan. 1, 2027.
• Increases the annual cap on total endow Kentucky income tax and LLET credits to $2 million.
• Adds laboratory equipment, computer servers, software, capitalized leases, and leasehold improvements to eligible investment costs under the Kentucky Business Investment (KBI) income tax and LLET credit program.
• Creates a sales tax incentive from July 1, 2026, until Nov. 30, 2036, for the sponsor of a professional sporting event equal to 100% of the sales of admissions, tangible personal property, and services.
• Provides income tax and LLET credits beginning on or after Jan. 1, 2027, and before Jan. 1, 2031, to a taxpayer that incurs rehabilitation expenses exceeding $150 million for a historic building with 25 or more stories.
• Repeals the authority to impose a local excise tax for schools based on a county resident’s individual income tax liability.

H.B. 757, Laws 2026, effective April 14, 2026, and as noted.

Maine

Multiple taxes: Governor signs supplemental budget with OBBBA conformity, other income tax changes

Maine Gov. Janet T. Mills has signed a supplemental budget bill which, among other things, addresses conformity with the federal One, Big, Beautiful Bill Act (P.L. 119-21).

Income tax changes

The following income tax changes are effective, unless otherwise noted, for tax years beginning on or after Jan. 1, 2025.

Maine has updated its conformity to the IRC and amendments made as of Dec. 31, 2025. Conformity with the IRC Section 174A(a) deduction for domestic research or experimental expenditures is phased in from 2026 to 2030, except for small businesses that meet the gross receipts test of IRC Section 448(c). A subtraction is allowed for amortization deductions under former IRC Section 174 for expenditures paid or incurred in tax years beginning after 2021 and before 2026.

Also, the net increase in depreciation attributable to the depreciation deduction under IRC Section 168(n) must be added to federal adjusted gross income, but the net increase in depreciation attributable to the depreciation deductions allowable under IRC Sections 167 and 168 had the depreciation deduction under IRC Section 168(n) not been claimed may be subtracted.

The amount of gain excluded under IRC Section 1400Z-2(a) for amounts invested in a qualified opportunity zone after 2026 must be added. In addition, the increase in basis allowed under certain subsections of IRC Section 1400Z(2) upon sale of property acquired after 2026 must be added, but to the extent included in federal adjusted gross income under IRC Section 1400Z-2(b) the amount of gain for which an addition was required in a prior tax year may be subtracted.

The amount of gain excluded under IRC Section 1202(a)(1) for sales of qualified small business stock acquired after July 3, 2025, must be added to federal adjusted gross income. For tax years after 2026, the standard resident personal income tax deduction equals the federal standard deduction, subject to phaseout.

The employer credit for family and medical leave for is repealed for tax years after 2025.

Income tax surcharge: For tax years beginning in 2026, a 2% income tax surcharge is imposed on high earners. For single filers, the tax is imposed on the part of taxable income that exceeds $1,000,000. For heads of households and married filing joint filers, the tax is imposed on the part of the taxable income that exceeds $1,500,000.

Pass-through entity tax

A pass-through entity tax applies to tax years beginning on or after Jan. 1, 2026. The tax is equal to the distributive share of income of all qualified members multiplied by the highest marginal individual income tax rate.

Qualified pass-through entity members may claim a refundable credit equal to 90% of their share of pass-through entity tax paid. Nonresident members included in a pass-through entity return aren’t required to file a separate income tax return if specified criteria are met.

Property tax exemption changes

Various changes are made to property tax exemptions, including folding veterans and blind persons exemptions into a tiered homestead exemption beginning April 1, 2027. The base homestead exemption is $25,000, with additional exemptions for veterans and blind persons.

Hospital tax base year change

The base year for Maine’s hospital tax is changed from hospital fiscal year 2022 to hospital fiscal year 2024, effective for state fiscal years beginning on or after July 1, 2026.

Ch. 650 (H.P. 1491), Laws 2026, effective as noted.

Maryland

Corporate, personal income taxes: Budget limits bonus depreciation, disallows special depreciation

Maryland’s Budget Reconciliation and Financing Act of 2026 contains the following income tax changes for 2026 and beyond:

• The amount of the IRC Section 168(k) bonus depreciation allowance that a manufacturing entity may claim against Maryland taxable income is limited to 20% of adjusted basis of qualified property, and a decoupling modification is established.
• The IRC Section 168(n) special depreciation allowance for qualified production property is permanently disallowed against Maryland taxable income, and a decoupling modification is established.

Ch. 6, S.B. 284, Laws 2026, effective as noted.

Michigan

Corporate income tax: Guidance provided on research and development credit

The Michigan Department of Treasury has released guidance on the research and development credit for corporate income tax and flow-through entity claimants. Claimants must file a tentative claim by the statutory deadline, which is April 1, 2026, for credits claimed based on Michigan qualified research expenses (MQREs) incurred in the 2025 calendar year.

Qualifying research and development expenses

Under IRC 41(b), qualified research expenses include in-house research expenses and contract research expenses. Claimants for the Michigan R&D credit may not use statistical sampling to calculate their MQREs. Furthermore, claimants may not use methods or elections available under IRC 41, such as aggregation of expenditures and proportionate sharing of the resulting credit.

The base amount, used in determining eligibility and in calculating the credit, is generally the average of the preceding three calendar years of MQREs.

Qualified research expenses sourcing

Qualified research expenses are attributable to Michigan if the services are physically performed in Michigan or the supplies are used in Michigan. For contract research expenses, expenses will be sourced where the research is conducted or the supplies are used by the third party.

Entities eligible to claim the expense

MQREs are attributable to the entity that bears the ultimate cost of the expenses. Where a business pays an unrelated business to perform services that result in more MQREs, the payer business would claim the Michigan R&D credit. MQREs and employees do not flow through to a flow-through entity’s owners.

Base amount

In order to qualify for the R&D credit, a claimant must have incurred MQREs during the calendar year in excess of the base amount. Both fiscal year and calendar year claimants must calculate the base amount using MQREs reported on a calendar year basis.

Claiming the R&D credit

A corporate income tax claimant must claim the credit with its annual return for the tax year for which the credit is claimed. A flow-through entity filing a withholding tax return claims the credit with its annual return for the tax year in which its tentative claim was filed. The tax year in which a flow-through entity will submit its tentative claim is the tax year following the end of the expense period. The guidance also addresses the calculation of the base amount for fiscal year conversion, federal reorganizations, acquisitions and dispositions, and unitary business group changes, calculation of employees, and statutory proration.

Revenue Administrative Bulletin 2026-4, Michigan Department of Treasury, March 26, 2026.

New Mexico

Corporate income tax, practice and procedure: Revision of NOL carryforward amount denied when prior years closed

The New Mexico Administrative Hearings Office denied a taxpayer’s protest regarding the New Mexico corporate income tax and net operating loss (NOL) carryforward amounts reported on its amended 2021 tax return. The court ruled that earlier loss years were closed to amendment under statutory limitations, and the New Mexico tax framework mandates NOL carryovers to be “properly reported” on original or amended returns filed within the statutory deadlines for those loss years.

The taxpayer’s amended 2021 return sought to revise apportionment factors and NOL computations for closed years, which the court determined was prohibited under New Mexico law. The department used the apportionment factors reported on the original filings for 2016–2018 and 2020 to calculate the 2021 NOL deduction, following statutory requirements. The court affirmed that statutory interest on the tax deficiency was mandatory under New Mexico law, and administrative delays during the protest process did not affect the accrual or validity of interest.

Columbia Associates, Inc. v. New Mexico Taxation and Revenue Department, New Mexico Administrative Hearings Office, No. 25.02-003O, D&O No. 26-002, Feb. 27, 2026.

New York

Personal income tax: Goodwill was investment income triggering mandated S corporation election

The New York Division of Taxation correctly determined that a mandatory S corporation election was triggered in a case involving an acquisition where a large portion of the sale price came from self-created goodwill. Under the tax law, the election is deemed to have been made if the eligible S corporation’s investment income is more than 50% of its federal gross income for the tax year. The adjustment resulted in additional net taxable gain flowing through to the shareholders. Although the shareholders argued that gain from the sale of the self-created goodwill in this case should be considered business income, the Tax Appeals Tribunal held in a previous decision that goodwill was investment income. That decision was a binding precedent and had to be followed in this case.

Petosa, New York Division of Tax Appeals, DTA Nos. 831253 and 831264, March 19, 2026.

Oregon

Corporate, personal income taxes: IRC conformity updated with new additions, earned income credit increased

Oregon has enacted changes affecting personal and corporate income taxes. The new law:

• Updates the IRC conformity date.
• Disconnects from IRC Section 1202 (exchange or sale of qualified small business stock), IRC Section 168(k)(bonus depreciation), and IRC Section 163(h)(4) (qualified passenger vehicle loan interest).
• Increases the earned income tax credit.
• Creates a new job credit.

What’s the new IRC conformity date?

Oregon enacted legislation updating the state’s IRC conformity date for computing the corporate activity, corporate and personal income taxes.

Oregon’s new IRC conformity date is Dec. 31, 2025. The previous conformity date was Dec. 31, 2023.

The conformity date applies to tax years beginning on or after Jan. 1, 2026. Taxpayers entitled to a refund before Jan. 1, 2026, because of retroactive treatment from the amendments, will not receive interest on the refund.

What parts of IRC are disconnected from?

The law disconnects from three IRC sections beginning in tax year 2026. First, Oregon disconnects from bonus depreciation under IRC Section 168(k). Specifically, taxpayers must add the difference between the amount allowable as a deduction under IRC Section 168(k) and the amount allowed as a deduction under IRC Section 168(k) amended and in effect on Dec. 1, 2017. Second, taxpayers must add an amount equal to any gain from the exchange or sale of qualified business stock (IRC Section 1202) that is excluded from income on the taxpayer’s federal income tax return. Finally, taxpayers will need to add an amount equal to qualified passenger vehicle loan interest (IRC Section 163(h)(4)) paid by the taxpayer and deducted on their federal income tax return.

What’s the new earned income tax credit amount?

The percentage of the federal earned income credit allowed is increased from 9% to 14%, or from 12% to 17% for taxpayers with a dependent under the age of three. The change is for tax years after 2025.

What is the new job credit?

A credit is allowed against the corporation and personal income taxes for each new job in Oregon created during the tax year. The credit allowed is in the amount of $1,000 for each net new job created by a taxpayer in the tax year, but a taxpayer may not receive a credit for more than 10 new jobs created per tax year. An employment position must have compensation that is equal to or greater than 150% of the applicable minimum wage.

The amount of the credit can’t exceed the tax liability of the taxpayer. The credit may be carried forward for three years. The credit is available beginning on or after Jan. 1, 2026, and before Jan. 1, 2032.

S.B. 1507, Laws 2026, effective 91 days after adjournment.

Multiple taxes: Conforming amendments enacted, BAIT extended

Oregon has updated its tax law to:

• Change “global intangible low-taxed income” to “net controlled foreign corporation tested income” to reflect federal tax law changes.
• Align the applicability of earned income tax credit changes to the credit’s underlying sunset date.
• Extend the cargo container property tax exemption sunset from June 30, 2026, to June 30, 2032.
• Extend the applicability of pass-through business alternative income tax (BAIT) and related personal income tax credit by two years (tax years 2026 and 2027).
• Allow BAIT overpayments to be credited as estimated payment for subsequent year.

S.B. 1510, Laws 2026, effective 91 days after adjournment.

Texas

Corporate income tax: Federal conformity memorandum revised

Texas has issued a revised version of its Dec. 19, 2025, memorandum regarding changes to the Texas Comptroller’s policy regarding franchise tax conformity with the Internal Revenue Code (IRC), effective for the 2026 franchise tax report. The revisions clarify that the one-time depreciation adjustment available to taxpayers to facilitate this policy change is intended for all taxpayers with qualifying assets, regardless of whether those assets were disposed of in the accounting period on which the 2026 report is based. All other aspects of the memorandum remain the same as the previous version.

Memorandum 202603002M, Texas Comptroller of Public Accounts, March 12, 2026.

Corporate income tax: Guidance on order of application of tax credits updated

Texas updated its guidance on the ordering of franchise tax credits and credit carryforwards. The revised guidance now addresses the strong families credit and the Subchapter T research and development credit.

The guidance states that taxpayers should apply franchise tax credits and credit carryforwards in the following order, and that for each type, taxpayers should apply credit carryforward amounts before any current year’s credit:

• 2008 temporary credits and credit carryforwards and R&D credits and credit carryforwards. Taxpayers may choose the order of application of these, but if the taxpayer does not request otherwise, the Texas Comptroller will apply these in order from the earliest expiration date to the latest expiration date.
• Multiple R&D credits. If a taxpayer takes multiple R&D credits, they must be applied in the following order: (a) Subchapter O carryforwards (b) Subchapter M carryforwards (c) Subchapter T carryforwards (d) Subchapter T current year credits.
• Clean energy project credits. Credit carryforward amounts should be applied before any current year’s credit.
• Historic structure credit.
• Housing development credit. Credit carryback amounts should be applied after that year’s credits and credit carryforwards.
• Strong families credit.

Memorandum 202604001M, Texas Comptroller of Public Accounts, April 15, 2026.

Washington

Personal income tax: Tax enacted on those with more than $1 million in income

Beginning Jan. 1, 2028, a 9.9% Washington income tax is imposed on individuals with income exceeding $1 million. Tax payments begin in calendar year 2029.

Base income

The determination of Washington taxable income starts with federal adjusted gross income (AGI) with the following modifications to arrive at the Washington base income:

• Exclude all long-term capital gains and losses from federal AGI.
• Add net long-term capital gains subject to Washington’s capital gains tax.
• Add Washington capital gains tax standard deduction, to the extent the deduction reduced the amount of long-term capital gains subject to the capital gains tax.
• Add interest income from debt obligations of other states.
• Add state and local taxes and B&O and public utility taxes to the extent these taxes have been deducted in determining federal AGI.
• Add loss carryforwards to the extent the amounts have been carried over from taxable years ending before Jan. 1, 2028 (and deduct 80 percent of net operating loss carryover if the loss is apportioned to Washington and occurred after Jan. 1, 2028).
• Add income from an incomplete nongrantor trust.
• Deduct interest income from federal debt obligations to the extent it is included in federal AGI.

Washington taxable income

Several deductions and one increase are applied to determine Washington taxable income. A taxpayer may deduct a standard deduction of $1 million per individual. In the case of spouses or domestic partners, their combined standard deduction is limited to $1 million, regardless of whether they file join or separate returns. The standard deduction is adjusted annually for inflation beginning in October 2029.

A taxpayer may deduct the amount of charitable contributions they claimed for the taxable year under Section 170 of the Internal Revenue Code, up to a maximum deduction of $100,000. In the case of spouses or domestic partners, their combined deduction is limited to $100,000, regardless of whether they file jointly or separately.

A taxpayer may deduct the amount deposited in a capital construction fund to be used for the construction, reconstruction, or acquisition of fishing vessels, if the contribution amount has reduced the taxpayer’s federal taxable income for the taxable year.

A taxpayer may deduct 90% of Washington-allocated gambling losses incurred in the current taxable year, though the loss deduction can’t exceed the amount of the gambling income included in the Washington base income.

A taxpayer may deduct from their Washington base income the amount of expenditures disallowed pursuant to Section 280E of the IRC, as long as the expenditures are related to the commercial cannabis activities by a person licensed in Washington.

A taxpayer must add the taxpayer’s distributive share of the tax expense incurred by a pass-through entity making an election to pay tax at the entity level.

Tax credits

A resident individual may claim a credit for any income tax paid to another state. A tax credit is also available against taxes owed for any B&O tax or public utility tax paid on the same income that is subject to this new tax. An additional credit is available for any Washington capital gains tax paid on capital gains taxed under the new income tax.

Tax administration

Taxpayer subject to this tax must annually file a return on or before the date the taxpayer’s federal tax return is due. If a taxpayer has obtained an extension for filing the federal return, the taxpayer is entitled to the same extension of time for filing the state return.

Beginning July 1, 2030, individuals subject to the tax must make estimated payments to the DOR using rules aligned with federal estimated tax payment requirements. Estimated tax payments aren’t required when the annualized tax liability is under $5,000.

Allocation and apportionment

A nonresident individual is subject to tax on the portion of their federal AGI derived from employment within Washington, regardless of the location of the employer’s commercial domicile. However, a nonresident must perform services in Washington more than five days cumulatively during a calendar year.

For a nonresident operating a business within and outside of Washington, income is apportioned as follows:

• Sales of tangible personal property are sourced to the state when delivered to an in-state purchaser or shipped from an in-state location under certain conditions.
• The sale, rental, or lease of real or personal property is sourced to the state when the property is located in Washington.
• Services are sourced to the state if the services are delivered within the state.
• Intangible property that is sold, rented, leased, or licensed is sourced to the state when it’s used in the state under various criteria.
• Capital gains and losses from sales of real property located in Washington are allocable to the state.
• Interest and dividends are allocable to the state if the business’s commercial domicile is in the state.

Pass-through entity election

Beginning Jan. 1, 2028, pass-through entities may elect to pay the 9.9% tax at the entity level. Pass-through entities may opt in annually by June 15 of the taxable year. Owners receive a credit for their share of tax paid by the entity and must report their distributive income on their own Washington returns.

Changes to the sales and use tax and B&O tax are discussed in a separate story.

S.B. 6346, Laws 2026, effective June 11, 2026, and as noted above.

Sales and use tax: Technical corrections bill enacted, taxation of retail services clarified

Washington has enacted a technical corrections bill that clarifies the administration and taxability of certain retail services enacted under S.B. 5814. The bill also amends provisions relating to the small business credit, payment card processing activities, and peer-to-peer car sharing.

Taxation of retail services

The following administrative changes have been made to the retail services enacted under S.B. 5814:

• The types of activities that meet the definition of information technology services and investigation services are clarified for purposes of the retail sales tax.
• Temporary staffing services don’t include direct hires, paymasters, or independent contractors.
• Certain specified activities don’t meet the definition of live presentation (classes provided by preschools, elementary schools, secondary schools, and institutions of higher education, musical, dramatic or comedic performances, one-on-one instructional activities, presentations given at a physical location of a religious organization, and youth camps).
• If a person is unable to source advertising services to the local level, the person must source the services statewide in a manner prescribed by the department.
• Authorizes the application of the affiliate exclusion for customized software and customization of prewritten computer software.
• The use of a digital automated service that is incidental to the underlying service isn’t subject to retail sales tax if the underlying service is subject to any B&O tax classification other than retailing.
• The use tax is imposed on all the newly enacted retail services except for live presentations.

“Retail sale” doesn’t include any service provided by a public agency to another public agency pursuant to an interlocal agreement.

A transition period is established for taxpayers with qualifying existing contracts for service activities that have been reclassified as retail activities. The transition period runs from Oct. 1, 2025, through March 31, 2026. Taxpayers may elect to treat the amounts received as gross income subject to either the B&O tax and retail sales tax or the service and other activities B&O tax.

Advertising services are eligible for the multiple points of use exemption.

The technical changes related to S.B. 5814, including the transition grace period, apply prospectively and retroactively to Oct. 1, 2025.

Payment card processing

The gross income subject to the business and occupation (B&O) tax under the payment card processing classification may be subject to the workforce education investment surcharge and the surcharge on specified financial institutions. This clarification applies prospectively and retroactively to Jan. 1, 2026.

Small business credit

The small business credit applies to the tax imposed on credit unions merging with a bank regulated by the Department of Financial Institutions.

Peer-to-peer car sharing

Peer-to-peer car sharing transactions aren’t subject to the additional motor vehicle sales tax. A peer-to-peer car sharing program can’t allow a vehicle to be placed on a digital network for the purpose of making it available for sharing unless it requests an electronic certification from the vehicle owner as to whether the shared vehicle owner obtained the shared vehicle as a vehicle for resale using a reseller permit or an approved exemption certificate.

Ch. 250 (S.B. 6113), Laws 2026, effective June 11, 2026, and as noted above; Final Bill Report; Governor's Veto Message, Office of the Governor, March 30, 2026.

Wisconsin

Corporate, personal income taxes: Carryover period of research income tax credit increased

Wisconsin has enacted legislation to increase the carryover period for unused research and certain business tax credits from 15 to 50 tax years, providing additional time to utilize already-earned credits. The new law applies retroactively to all research income and franchise tax credits claimed from previous tax years that have not been used to offset tax, have not expired, or have not been refunded.

Act 220 (S.B. 482), Laws 2025, effective April 10, 2026.

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