State and local tax (SALT) developments remained active throughout the fourth quarter of 2025. From legislative responses to federal tax changes to adjustments in sourcing rules, refined compliance programs, and other state-level initiatives, jurisdictions across the country continued to shape their fiscal frameworks.
This update captures the most notable SALT developments from the fourth quarter, offering practical insights to help navigate compliance requirements, inform planning decisions, and stay aligned with changes in state and local tax policies.
Northeast
Delaware
- House Bill 255: Delaware will not follow certain federal bonus depreciation and research and expenditures (R&E) expense rules under the “One Big Beautiful Bill Act” for corporate and individual taxpayers.
Maine
- Streaming and Digital Content Taxable: Effective January 1, 2026, Maine will begin imposing sales tax on streaming services and other digital content, aligning its tax base with broader trends toward taxing digital goods.
New Hampshire
- Tax Amnesty Program: New Hampshire launched a tax amnesty program allowing taxpayers to settle outstanding liabilities with penalties waived and partial interest relief through February 15, 2026.
New York
- Unincorporated Business Tax (UBT) Deduction Guidance: New York City affirmed that federal interest expense deductions are generally allowed under the UBT unless a specific city modification applies.
Pennsylvania
- Working Pennsylvanians Tax Credit Enacted: Pennsylvania enacted a new refundable tax credit designed to provide targeted relief to eligible low-income workers.
Rhode Island
- Sales and Excise Tax Changes Enacted: Rhode Island enacted several tax changes effective October 1, 2025, including a new sales tax on short-term parking services, an expanded definition of other tobacco products to include nicotine pouches, and increased Real Estate Conveyance Tax rates.
- Hospitality and Short-term Rental Taxes Expanded: Effective January 1, 2026, Rhode Island increased the local hotel tax rate from 1% to 2% and enacted a new 5% tax on the short-term rental of entire residential dwellings.
Washington, DC
- FY 2026 Emergency Budget: Washington, DC froze the general sales tax at 6% through September 2026, extended the 1% hotel tax surtax through September 2027, and delayed the combined reporting Financial Accounting Standards (FAS) 109 deduction until tax year 2030.
Southeast
Florida
- Mortgage Tax Refund: Florida courts confirmed that refinanced home loans without new money are exempt from stamp and intangible taxes, entitling taxpayers to refunds.
North Carolina
- Gift Card Taxation: The NC Supreme Court ruled that gift cards redeemable for taxable wireless services require sales tax at redemption, shifting liability from the retailer to the service provider when cards are partially used for non-taxable products.
Midwest
Illinois
- Social Media Amusement Tax: Effective January 1, 2026, Chicago will impose a new tax on certain paid digital entertainment accessed through social media platforms.
- Personal Property Lease Tax Increase: Chicago increased the personal property lease tax rate from 11% to 15%, effective January 1, 2026, impacting lessees of non possessory personal property such as software and cloud based services.
Michigan
- Rounding Guidance: Michigan clarified that sales and use tax must be computed to the third decimal and rounded to the nearest cent, allowing flexibility to handle the federal phase-out of pennies.
Texas
- Senate Bill 2206: Texas repealed the sales and use tax exemption for depreciable tangible personal property used in qualified research effective January 1, 2026, including prewritten (canned) software and research and development (R&D) equipment. Taxpayers may instead pursue a new franchise tax credit for qualified research expenses.
- Bonus Depreciation Conformity: Texas confirmed it will conform to federal bonus depreciation under the “One Big Beautiful Bill Act” for qualifying assets acquired after January 19, 2025.
West
California
- Senate Bill 711: California updated its Internal Revenue Code (IRC) conformity to January 1, 2025, selectively decoupling from key provisions.
- Covered Battery-embedded Waste Recycling Fee: Effective January 1, 2026, a fee will apply to certain battery-embedded products, with exemptions for medical devices, energy storage systems and electronic nicotine delivery systems.
Oregon
- Transportation Taxes: Oregon enacted a major transportation package including fuel tax increases, vehicle fees, and updates to the Road Usage Charge program for electric and hybrid vehicles.
Washington
- Sales Tax Expansions: Effective October 1, 2025, Washington implemented additional sales tax provisions, including new taxable services such as IT training, staffing and advertising, as well as expanded eligibility for the Voluntary Disclosure Agreement program.
Your Guide Forward
The fourth quarter of 2025 brought targeted SALT developments across multiple jurisdictions, including updates to compliance requirements and state responses to federal tax changes. Staying aware of these changes is critical for effective planning.
For tailored guidance and support navigating these developments, consult your tax advisor or a qualified Cherry Bekaert SALT professional today.
Explore our past Quarterly SALT Updates for additional developments and insights.
