Breaking News:More States Opt Not to Tax GILTI
This has been an eventful and exciting week for those interested in the states’ taxation of global intangible low-taxed income (GILTI). On Monday, taxpayers received the good news that New York Governor Cuomo signed S. 6615—a bill that excludes 95% of GILTI from the New York State corporate income tax base. By passing this bill, New York joins many other states—including neighboring states Massachusetts, Connecticut and Pennsylvania—that chose not to tax a material portion of GILTI. The New York law instructs taxpayers that have GILTI to include the 5% of GILTI that is taxed in the denominator of the apportionment formula (no portion of GILTI is included in the numerator of the apportionment formula).
Perhaps not surprisingly, after the New York news broke, the Florida legislature presented its GILTI exclusion bill (HB 7127) to Governor DeSantis. HB 7127 passed the legislature back in May but had not been transmitted to the governor until yesterday. Those on the ground in Florida believe that the transmittal to the governor now, on the heels of the New York legislation, suggests that the governor will sign the bill. The governor has 15 days to sign or veto the bill (if he does neither, the bill becomes law after the 15-day period).
There was also GILTI action on the west coast. On Monday, the Oregon legislature passed a bill (SB 851) that allows taxpayers to deduct 80% of GILTI under the state’s dividend-received deduction. While, under this legislation, Oregon would tax a larger portion of GILTI than many other states, the willingness of the legislature to extend the 80% deduction to GILTI is consistent with the trend among states to not tax this new category of income from foreign operations. The bill has not yet been signed by Oregon Governor Kate Brown.