Blind conformity to the Internal Revenue Code results in a significant business tax increase.

The STAR Partnership has worked to provide guidance to states as they navigate the post-federal tax reform world. States should avoid blindly conforming to the Internal Revenue Code. For businesses, conformity without modification is a significant tax increase. The right answer is to decouple from federal base broadening provisions. To learn more, download our advocacy packet here.


Potential State Tax Issues

Deferred Foreign Earnings Transition Tax

  • Inclusion at state level in year one
  • States decoupling from deduction
  • Apportionment issues


  • Inclusion in state taxable income
  • States decoupling from deduction
  • Apportionment issues

100% Expensing

  • States decoupling from deduction
  • What depreciation regime to use if state decouples

Interest Expense Limitation

  • Failure to decouple could lead to a tax increase
  • Interaction with state addbacks

Net Operating Loss (NOL) Limitations

  • Advocating for state changes in situations where the 80% NOL limitation automatically impacts state tax liability
  • Guarding against states affirmatively imposing an 80% limitation
  • Potential for advocating that states enact unlimited carryforward period

Base Erosion Alternative Minimum Tax

  • Guarding against states mimicking this alternative minimum tax