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
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
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
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)