KBF State Income Tax Newsletter – 3rd Quarter 2024

KBF’s quarterly newsletter updates clients on state and local income/franchise tax news, developments, and trends. Please note that this information is for discussion purposes only and does not constitute specific tax advice.

Here are some important updates:

District of Columbia

The District will transition from the “Joyce” method to the “Finnigan” method of apportionment for tax years beginning after December 31, 2025. The law change will impact how income is sourced for combined filers. (Effective: Tax Year 2026)

Hawaii

The state’s research activities tax credit has been extended through December 31, 2029, the rule that made the base amount in the IRC irrelevant was removed and the definition of a “Qualified High Technology Business” has been revised. (Effective: Jan. 1, 2024)

Massachusetts

A tax amnesty program is available from November 1 to December 30, 2024, allowing eligible taxpayers to waive penalties and settle outstanding tax liabilities.

Nebraska

The Nebraska Supreme Court ruled that IRC § 965 amounts are not eligible for the state’s dividends received deduction. (Decision: Aug. 30, 2024)

Pennsylvania

The state’s net operating loss deduction limitation is gradually increasing to align with the federal deduction by 2029. Additionally, a new related party income election is available for tax years beginning on or after January 1, 2023. (Enacted: Jul. 11, 2024)

South Carolina

A recent court decision supports the Department of Revenue’s interpretation of the state’s unique sourcing rules, which focus on the location of the borrower for certain financial transactions. (Decision: Aug. 19, 2024)

Read more about these updates by downloading the newsletter here. For more information or specific tax guidance, please contact Nick McMahon at nmcmahon@kbfcpa.com or connect with a KBF professional here.