State and local tax year-end considerations in 2023

Actions and ideas taxpayers should be thinking about before 2024 begins

Oct 16, 2023

Key takeaways

Periodic reviews of nexus are necessary to reduce exposure and identify opportunities

Apportionment and sourcing in today’s landscape is as difficult as ever to get right

Sales and use tax reviews are crucial as the taxes become a larger component of state and local tax spending

Business tax State & local tax

State legislatures were once again in full swing in 2023, but the story of near-universal state surpluses from the last two years has reached its denouement. Cracks have begun to show in the fiscal foundation of state budgets, as tax revenues saw the first signs of declining growth—but not among all states or taxes.

Still, many states continued tax cuts. While the fiscal environment remains unclear, taxpayers should prepare for decreased tax revenue growth over the next couple of years. Less revenue may provide states an opportunity to revisit tax base or tax rate increases. Preparation is key.

Importantly, state taxpayers are never without planning opportunities. Below we address a number of potential focus areas that should be considered for year-end state and local tax planning depending on a taxpayer’s facts and circumstances. Many of the topics listed below create risk for taxpayers who ignore them completely and opportunity for taxpayers who plan ahead.

  • Nexus
  • Public Law 86-272
  • Gross receipts taxes
  • Sourcing
  • Apportionment
  • State transfer pricing
  • State income tax refund
  • Unitary taxation
  • Credits and incentives compliance
  • Sales and use tax process
  • Reverse sales and use tax audits
  • Digital assets

Learn more about these year-end considerations in our planning guide.

RSM contributors

Featred webcast

Year-end planning forum

Part of the Tax in Motion 2023 Series, join us for three sessions. Let us help you consider your tax positions as the year comes to a close.