A recent Bloomberg Law article suggests the coming year could bring pivotal state and local tax rulings with implications that extend well beyond the individual disputes.
Pending cases in New York, South Carolina and Maryland raise key questions involving foundational state tax issues that SALT practitioners will be watching closely in 2026.
One such dispute now before a New York appellate court centers on claims by payroll and HR services provider Paychex Inc. that a New York State Department of Taxation and Finance regulation conflicts with the state’s corporate tax statute, which allocates income using New York receipts divided by total receipts.
According to Aruna Chittiappa, “the case sits at the intersection of statutory interpretation, appointment mechanics, constitutional limitations around retroactivity and agency deference.”
“What happens when the statute that’s been on the books since 2014 does not square with the regulations that the department has promulgated?” she asked. “That’s why this case is important on many different levels.”
Click here to read the full article (subscription required).
New York City’s Department of Finance (DOF) has issued the first tranche of proposed regulations under new Chapter 11A of Title 19 of the Rules of the City of New York (Proposed Rules) to implement its 2015 corporate tax reform—moving straight into formal rulemaking, in contrast with State’s multi-stage drafting process that culminated in December 2023. Although the City’s new Business Corporation Tax (BCT), applicable to corporations and banks that are not federal S corporations, largely mirrors the State’s framework, the Proposed Rules purposefully diverge in several places. The DOF has scheduled a virtual public hearing on the Proposed Rules for 11:00 am ET on November 20, 2025, and all written comments are due in advance of the hearing.
Proponents have filed a California ballot initiative proposing a one-time wealth tax on individuals with more than $1 billion in net worth. The “2026 Billionaire Tax Act” would impose, for tax year 2026, a 5% tax on “all forms of personal property and wealth, whether tangible or intangible” exceeding $1.1 billion, with a slightly lower rate on amounts between $1-$1.1 billion. California residents, part-year residents, and certain trusts would be subject to the tax. The initiative would also impose penalties ranging from 20-40% for understatements of the tax.
