State Tax Conformity:
Global Intangible Low-Taxed Income Tracker

As filings for the 2018 tax year are finalized, states are belatedly adopting legislation or providing administrative guidance on the treatment of Global Intangible Low-Taxed Income (GILTI). While state approaches are discussed at greater length in our paper on state tax conformity, this is a fast-moving issue with new developments expected frequently in the coming weeks and months.

Some states exclude GILTI (§951A) from their income tax base. Others include it initially but treat it (either legislatively or administratively) as foreign dividend income subject to the dividends received deduction. Finally, among those which tax or potentially tax GILTI, some states incorporate the partially offsetting deduction (§250), while others do not.

States which use separate (rather than combined) reporting and nevertheless seek to tax GILTI face a serious constitutional challenge, particularly under the precedent of Kraft v. Iowa Department of Revenue (1992), a U.S. Supreme Court case striking down a business tax that allowed a deduction for dividends received for domestic, but not foreign, subsidiaries. These states should take particular pains to avoid taxing GILTI.

In the table below, we indicate each state’s approach to GILTI and highlight new developments in 2019. We will update this page as states announce new guidance or address GILTI legislatively.

State Taxation of Global Intangible Low-Taxed Income

(a) Conforms to a prior year and does not yet include GILTI.

(b) California separately taxes controlled foreign corporations and may not be able to tax GILTI in addition.

(c) Maine provides a 50 percent subtraction modification for GILTI but adds back the federal deduction.

Sources: State statutes; revenue offices; Bloomberg Tax; Council on State Taxation

State GILTI Inclusion § 250 Deduction Reporting Regime Potential Taxation of GILTI 2019 Updates
Alabama Yes Yes Separate Yes (constitutional issue)  
Alaska Yes Yes Combined Yes  
Arizona Yes (a) Yes (a) Combined Yes (with conformity update)  
Arkansas No No Separate No  
California (b) Yes (a) No (a) Combined Yes (with conformity update)  
Colorado Yes Yes Combined Yes  
Connecticut Yes Deductible under DRD Combined No  
Delaware Yes Yes Separate Yes (constitutional issue)  
Florida Yes Yes Separate Yes (constitutional issue)  
Georgia No Yes Separate No  
Hawaii No No Combined No  
Idaho Yes No Combined Yes  
Illinois Yes Deductible under DRD Combined No  
Indiana Yes No Separate No  
Iowa Yes Yes Separate Yes (constitutional issue)  
Kansas Yes Yes Combined Yes  
Kentucky No No Separate No  
Louisiana Yes Yes Separate Yes (constitutional issue)  
Maine Partial (c) No Combined Yes  
Maryland Yes No Separate Yes (constitutional issue)  
Massachusetts Yes Deductible under DRD Combined No  
Michigan Yes Yes Combined No  
Minnesota Yes (a) No (a) Combined Yes (with conformity update)  
Mississippi Yes No Separate Yes (constitutional issue)  
Missouri Yes Deductible under DRD Separate No Feb. 1
Montana Yes No Combined No  
Nebraska Yes Yes Combined Yes  
Nevada n/a n/a Separate n/a  
New Hampshire Yes (a) No (a) Combined Yes  
New Jersey Yes Yes Separate Yes (constitutional issue)  
New Mexico Yes No Separate Yes (constitutional issue)  
New York Yes No Combined Yes  
North Carolina No No Separate No  
North Dakota Yes Deductible under DRD Combined No  
Ohio n/a n/a Separate n/a  
Oklahoma Yes Yes Separate Yes (constitutional issue)  
Oregon Yes No Combined Yes  
Pennsylvania Yes Deductible under DRD Separate No Jan. 24
Rhode Island Yes No Combined Yes  
South Carolina No No Separate No  
South Dakota n/a n/a Separate n/a  
Tennessee Yes No Separate Yes (constitutional issue)  
Texas n/a n/a Combined n/a  
Utah Yes No Combined Yes  
Vermont Yes Yes Combined Yes  
Virginia Yes (a) Yes (a) Separate Yes (with conformity update)  
Washington n/a n/a Separate n/a  
West Virginia Yes Yes Combined Yes  
Wisconsin No No Combined No  
Wyoming n/a n/a Separate n/a  
District of Columbia Yes Yes Separate Yes (constitutional issue)  

 


Related Resources

Toward a State of Conformity: State Tax Codes a Year After Federal Tax Reform

GILTI Minds: Why Some States Want to Tax International Income—And Why They Shouldn’t

A Hybrid Approach: The Treatment of Foreign Profits under the Tax Cuts and Jobs Act