Q3 2026 brought state changes that may affect federal conformity adjustments, corporate tax bases, apportionment, pass-through entity tax (PTET) elections, and filing thresholds. The practical effect depends on the state, taxpayer type, and tax year: review each affected return separately, and verify the current law and case status before changing a filing position.
This roundup covers developments from July through September 2026, based on Crowe’s roundup published October 6, 2026, plus the cited North Carolina and Minnesota Department of Revenue guidance. It focuses on business and multistate tax issues, not a general guide to individual state income taxes.
Federal conformity and state tax bases changed in several states
States do not automatically adopt every federal tax-law change. A state may use a fixed conformity date, update that date by statute, or decouple from particular federal provisions. The North Carolina Department of Revenue defines conformity as “the process by which a state aligns its income tax law with the Code.” A conformity date alone therefore does not establish that every federal deduction or calculation applies on the same terms in a state.
| Jurisdiction | Q3 development | Taxpayers and periods to check |
|---|---|---|
| District of Columbia | Crowe reports that D.C. Act 26-416, enacted August 13, 2026, temporarily decouples from specified One Big Beautiful Bill Act provisions. The listed subjects include domestic research and experimentation (R&E) capitalization, the interest-limitation calculation, bonus depreciation, Section 179, other-jurisdiction PTET addbacks, and owner credits. The emergency act lasts no more than 90 days. | Check the status of the emergency measure and applicable tax year before relying on it; the reported duration makes its continuing effect especially time-sensitive. |
| North Carolina | Session Law 2026-31 updated the state’s Internal Revenue Code reference date to July 5, 2025. Crowe reports state adjustments involving domestic R&E deductions and partnership audits. North Carolina describes itself as a static-conformity state, so legislative action is needed to align state law with later Code changes. The department also says North Carolina did not adopt the federal deductions for tips, overtime, car-loan interest, and seniors for 2025. | The Department of Revenue says taxpayers affected by provisions applying to a tax year beginning before January 1, 2026, should file or amend the relevant return. It expected 2026 return instructions in January 2027; check the instructions when issued. |
| New Jersey | Crowe summarizes a temporary corporate business tax net operating loss (NOL) deduction cap of $1 million in aggregate for tax years ending on or after July 31, 2026, and before July 31, 2030, subject to exceptions and carryover treatment. For periods ending on or after July 31, 2030, and before July 31, 2032, a later cap limits the deduction to 75% of entire net income. | Corporate filers should identify the relevant tax-year ending date and review the statutory exceptions and carryover provisions. These limits are reported in Crowe’s summary; consult the law for a filing or planning position. |
| Pennsylvania and Philadelphia | Crowe reports Pennsylvania guidance addressing net CFC tested income (NCTI, formerly commonly referred to as GILTI), dividends-received deductions, sales-factor treatment, and Section 163(j) conformity. Philadelphia guidance says Business Income and Receipts Tax (BIRT) filers using the net income method follow Pennsylvania’s OBBBA decoupling rules for tax years beginning after December 31, 2024, including adjustments for R&E, depreciation, and interest limitations. | Review the Pennsylvania and Philadelphia computations separately, including the Philadelphia tax method and tax-year start date. |
| Minnesota | The Minnesota Department of Revenue says the 2026 tax bill updated the state’s conformity date to May 1, 2026, while decoupling from some federal provisions. It also describes individual adjustments, including a charitable-contribution deduction limit beginning in tax year 2026 and additions involving certain employer education benefits. The bill extended Minnesota PTET through tax year 2027. | Businesses and owners should identify which provisions affect the entity return, owner return, or both; a conformity-date update does not override Minnesota’s specific decoupling adjustments. |
Court decisions may affect apportionment, sourcing, or nexus positions
The cases below turn on particular facts, tax years, and procedural stages. They are not blanket rules for every business with a similar label or business model.
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| State and case | What the court or agency decided | Why the facts matter |
|---|---|---|
| California — Yorick | The Office of Tax Appeals rejected a claim to use the agricultural-business exception to California’s equally weighted three-factor apportionment formula. | The decision focused on the taxpayer’s own activities, rather than the agricultural use customers made of its products. |
| California — Western Distributing | The Office of Tax Appeals found an out-of-state beverage-distribution division was not unitary with the taxpayer’s other divisions on the record before it. | Shared administrative functions alone did not establish sufficient unity in that case. |
| Massachusetts — Skechers | The Appeals Court upheld manufacturing-corporation classification for a company using overseas contract factories, for the 2015–2017 tax years. | The company’s design work, oversight, quality control, and involvement in production supported the classification. Crowe notes Massachusetts eliminated the manufacturer/nonmanufacturer apportionment distinction beginning in 2025, so the earlier-period result should not be applied without checking the law for the tax year at issue. |
| Massachusetts — Smithfield | The Appellate Tax Board held that the state could not include a P.L. 86-272-protected affiliate’s receipts in taxable members’ sales-factor numerators through a Finnigan-style reallocation. The case also addressed aggregation of intracompany manufacturing and sales activity for a manufacturer apportionment method. | The Department of Revenue filed an appeal on September 25, 2026. The decision’s status may change, so check for subsequent proceedings before relying on it. |
| New Hampshire — Hologic | On August 26, 2026, the state supreme court held that a water’s-edge combined group could not carry back one member’s capital loss to offset another member’s capital gain. | Combined groups should assess the ruling against their own loss, gain, and filing-period facts. |
| Ohio — Perrigo | The state supreme court held that gross receipts for the commercial activity tax reflected amounts actually received under contractual pricing arrangements, rather than higher invoice list prices. | The issue may be relevant where contract chargebacks or offsets make invoice totals greater than receipts. The outcome depends on the relevant agreements and amounts received. |
| Ohio — Dollar Bank | On August 13, 2026, the Ohio Supreme Court rejected a dormant Commerce Clause challenge to the financial institutions tax rate structure. | Financial institutions considering a constitutional challenge should distinguish this ruling from issues it did not decide. |
PTET rules and related business provisions require tax-year checks
Illinois partnership PTET computation
For tax years ending on or after December 31, 2026, Illinois guidance allows electing partnerships to use either of two computation approaches:
- Use Illinois-sourced distributive shares for all partners; or
- Use resident partners’ full distributive shares plus Illinois-sourced income of nonresident partners.
The state bulletin also includes estimated-payment guidance. Partnerships should confirm the applicable method and payment requirements for the filing year rather than assume the options apply to an earlier year.
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Maine’s new PTET
Maine Revenue Services’ August 2026 tax alert describes a new PTET for tax years beginning on or after January 1, 2026. Crowe reports a 7.15% PTET rate and a refundable credit for qualified members equal to 90% of their distributive share of Maine PTET paid. The Maine payment portal was expected to accept payments starting September 4, 2026. Estimated payments were required only for payments due on or after July 29, 2026, and the alert provided for no first-year underpayment penalties. Check current agency instructions for payment and election details.
Minnesota PTET extension
Minnesota’s 2026 tax bill extended PTET through tax year 2027, according to the Department of Revenue. Partnerships and owners should confirm election and credit treatment under the state’s rules for the specific year.
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New Hampshire business tax thresholds and R&D credits
Crowe reports that H.B. 155 raises the business enterprise tax filing threshold from $250,000 to receipts or enterprise value tax base exceeding $400,000. It also creates a contingent rate-reduction mechanism: each full $100 million of certified surplus reduces the rate by 0.05 percentage points, subject to a 0.25% floor.
Under H.B. 1102, the R&D credit cap rises from $50,000 to $100,000 effective January 1, 2027; the aggregate annual cap rises from $7 million to $10 million effective January 1, 2028. These are distinct effective dates and should not be treated as one change taking effect at the start of 2027.
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How to turn the roundup into a return review
- Map each entity and tax. Identify corporations, partnerships, combined groups, financial institutions, and owners, along with the relevant income, franchise, gross-receipts, or local tax returns.
- Match the rule to the tax year. Record whether the governing language uses a year beginning date, year ending date, enactment date, or a specified transition period. This is essential for the New Jersey NOL limits, Maine PTET, Illinois partnership options, and state conformity adjustments.
- Reconcile federal and state computations. Track each conformity date and state-specific decoupling or addback separately; do not assume federal deductions flow through automatically.
- Revisit apportionment and receipts evidence. Review the taxpayer’s own activities, unitary-group facts, contract terms, actual receipts, and sales-factor sourcing rather than relying on a case name alone.
- Check election, payment, and amendment consequences. For PTET and potential amended returns, use the applicable agency instructions and confirm who is eligible and which period is covered. North Carolina’s agency guidance specifically directs affected taxpayers to file or amend returns for provisions applying to tax years beginning before January 1, 2026.
- Verify authority and current status. Crowe’s October 6, 2026 roundup is a secondary professional summary. Confirm statutes, agency bulletins, and opinions directly, especially for D.C.’s time-limited emergency act, the Massachusetts Smithfield appeal, and year-specific PTET rules.
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