On November 2, 2017, Republicans in the House of Representatives released their much-anticipated tax reform bill. The Tax Cuts and Jobs Act proposes numerous changes to the Internal Revenue Code, many of which will have an impact on taxpayers’ state and local tax liabilities.

  • Most states conform to the federal income tax base —at least in part. Consequently, federal base changes—either in the form of contraction or expansion—will have an impact on the state tax bases. States will need to weigh many considerations as they decide whether to conform.
  • The Commerce Clause may restrict a state’s ability to conform to some of the international tax provisions of the House Plan that may not also apply to purely domestic companies.
  • The House Plan proposes numerous changes that would move toward a territorial system of taxation. These will have an impact on state and local taxation, both by changing a taxpayer’s federal taxable income and by impacting taxpayer decision-making.

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