Federal Tax Reform Expected to Drive 12% Increase in State Corporate Income Taxes

Ernst & Young press release March 5, 2018 --------- Federal tax reform has the potential to significantly expand state corporate tax bases, according to a new study prepared by EY Quantitative Economics and Statistics (QUEST) on behalf of the Council On State Taxation (COST) State Tax Research Institute (STRI). The study provides estimates of the potential impact of federal tax reform on state corporate tax bases over the next decade under the Tax Cuts and Job Acts (TCJA) of 2017.The report estimates the potential expansion in the state corporate income tax bases by state from the major provisions contained in the TCJA. The estimated nationwide overall increase in state corporate income tax bases is 12% over the next 10 years, with significant variations between the states by year. The average expansion in the state corporate tax base is estimated to be 8% from 2018 through 2022, which increases to 13.5% for the period 2022 through 2027. The degree of increase in later years grows primarily due to the impact of research and experimentation (R&E) expense amortization beginning in 2022 and the change in the interest limitation in the same year. To learn more click on the picture below to read the release.