10 Key Things Tax Professionals Should Know About State and Local Business Incentives

Tax Credits

State and local business tax incentives are powerful tools that can significantly reduce a company’s tax burden and influence business decisions. Every U.S. state offers some form of incentive to attract or retain businesses, from tax credits and exemptions to cash grants and property tax abatements. For experienced tax professionals, understanding these incentives is crucial for effective tax planning and helping clients maximize savings. Below are ten key things to know about state and local business incentives, along with real-world examples and actionable insights. We’ll also wrap up with essential dos and don’ts when advising clients on these programs.

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CURRENT EDITION

2026 Changes to Form 2441 and Dependent Care Benefits

Jason Dinesen, CPA

The credit for dependent-care expenses (such as daycare costs) has long been stuck at 20% for “average” taxpayers. It finally gets a permanent boost in 2026 (for returns filed in 2027). Also, the amount of money a taxpayer can put into a dependent care assistance program is increasing by $2,500 for 2026. This change presents a chance for taxpayers and tax pros to reevaluate which is better – claiming the credit or using a flex plan.

Turning Intellectual Property into Interest Deduction Capacity: Use of an IP Holdco After the OBBBA

Ted Stotzer

Many taxpayers have lived with a frustrating mismatch since the Section 163(j) limitation tightened after 2021 – the business may generate plenty of cash, yet its interest deductions are limited because adjusted taxable income (“ATI”) is too low, e.g., due to capex. The 2025 restoration of depreciation and amortization addbacks makes ATI planning relevant again, especially for groups that own valuable intangible property (“IP”), and the choice of legal entity to house group IP may have very different tax consequences as discussed in this article.

Do You Know U.S. Tax History?

Annette Nellen, CPA, CGMA, Esq.

In recognition of the 250th anniversary of the adoption of the Declaration of Independence on July 4, 1776, let’s review 250 years of tax history. Our nation’s tax systems have evolved over two and a half centuries as ways of doing business and living have changed. Also, expectations of services the public wants and needs from the government have grown, resulting in tax changes to generate increasing amounts of tax revenue. Along the way, lawmakers have considered principles of simplification, equity, fairness, economic growth and effective tax administration that have shaped our tax laws. This article offers questions and answers to cover a range of interesting aspects of our federal tax history.

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CURRENT EDITION

2026 Changes to Form 2441 and Dependent Care Benefits

Turning Intellectual Property into Interest Deduction Capacity: Use of an IP Holdco After the OBBBA

Do You Know U.S. Tax History?

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