Supreme Court Case Among State and Local Tax Issues to Watch

Tax attorneys Jennifer Karpchuk, Thu Lam and Olivia Klein wrote an article for Bloomberg Tax examining state and local tax (SALT) issues to watch in 2026. They predict more challenges to Public Law 86-272, a federal law that prohibits states from imposing income taxes on out-of-state businesses that only solicit sales of tangible personal property in the state. Several states have adopted the Multistate Tax Commission's revised guidance on the law, which incorporates provisions on online activities, but industry groups continue to push back. Relatedly, the authors talk about Maryland's digital advertising tax, enacted in 2022 and mired in litigation since, along with Washington state's version passed in October 2025; they advise taxpayers to monitor the cases to see how courts respond as state legislatures increasingly target digital advertising services to raise revenue. On the legislative front, 2025's One Big Beautiful Bill Act made a number of changes to the Internal Revenue Code, which affect states differently depending on their type of conformity: fixed/static, rolling and selective. Finally, the article touches on a dispute between Florida and California over the latter's occasional sales rule as well as a U.S. Supreme Court case – Pung v. Isabella County – that will address how to measure "just compensation" for purposes of Takings Clause compliance when there is a taking of private property.

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