No client’s ever happy about having to pay state income tax in addition to federal, but at least in the past that chore was straightforward: Make money in a state, probably the one where you live and work, and you owe tax on what you made if that state has an income tax. Enter the computer and the fax machine, later the modem, email and Zoom. Then enter the pandemic and widespread remote work from home that’s largely lingered after Covid faded. Cap it off with the new maneuver of moving from a high-tax state to a low-tax one but not completely severing all former work and life connections. It is any surprise, really, that states would try to squeeze tax revenue out of that using regulations still unchanged from the past? And for punishing what that state suddenly thinks are tax cheats? Do you have a client a state might be interested in? How many states? And how do you actually know?
Worrisome Messages Subtly Delivered Via Recent Tax Developments
Tax professionals are inundated with tax developments from all branches of the government and from all levels of government on a daily basis. Our technical tax knowledge expands weekly. Given the immensity of tax law changes in P.L. 119-21 (July 4, 2025), informally named the One Big Beautiful Bill Act (OBBBA), and the guidance we’ll continue to get over the next few years along with non-OBBBA updates, we might run out of time and bandwidth to step back and ask what additional relevance this guidance, as well as various reports issued by the government every day, mean for the well-being of our tax system. This article unpacks select tax law changes and government documents to offer four subtle messages within them. Generally, the messages don’t bode well for an effective tax and revenue system. The article ends with some suggestions on what can help improve our tax system.
