SALT changes in 2026 and beyond: What indirect tax teams need to know

2026-03-20 · Source: Thomson Reuters Institute · Field: Legal & Regulatory — Compliance & Risk Management, Regulatory Affairs & Government Relations, Corporate Law & Business Legal Services · Depth: Intermediate, short

Summary

State and local tax (SALT) policies are undergoing significant changes in 2026 and beyond, driven by digital taxes, federal conformity shifts, and state budget pressures. These changes directly impact cash taxes, effective tax rate volatility, and audit exposure for large, multistate businesses. States are implementing "tax swaps" to broaden sales & use tax bases while reducing income or property taxes, and reassessing data center exemptions. New digital and AI-related taxes are creating complex nexus and sourcing issues, particularly for companies monetizing data or using digital advertising. Additionally, the One Big Beautiful Bill Act (OBBBA) and federal shifts like the discontinuation of the penny and tariff refund complexities are magnifying state-by-state compliance challenges, requiring granular modeling and inter-departmental collaboration for corporate tax teams.

Key takeaway

For corporate tax leaders managing multistate operations, your team must proactively inventory existing credits and incentives, build forward-looking models for sales tax expansion, and map digital and AI-related exposures against pending tax proposals. Partnering with IT and marketing teams is critical to understand how contracts and platform design affect nexus and tax base definitions, ensuring compliance and mitigating audit risks in a rapidly changing environment.

Key insights

Evolving state and local tax policies, driven by digital economies and federal changes, demand proactive corporate tax strategy.

Principles

• Budget pressures drive tax base expansion.
• Digital services create new tax nexus.
• Federal changes ripple through state tax codes.

Method

Inventory credits/incentives by jurisdiction, model sales tax base expansion, map digital ad spending/AI deployments against tax proposals, and partner with IT/marketing.

In practice

• Assess data center exemption risks.
• Model OBBBA impacts on apportionable income.
• Configure POS for penny elimination rounding.

Topics

• State and Local Tax
• Digital Economy Taxation
• AI-related Tax Policy
• Federal Tax Conformity
• Data Center Tax Incentives

Best for: CTO, Executive, Entrepreneur, Legal Professional, Business Analyst, Consultant

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Editorial summary, takeaway, and curation by AIssential. Original article published by Thomson Reuters Institute.