2026 SALT Tax Trends: Economic Nexus, PTET and Remote Work Challenges

State and local tax (SALT) rules are becoming more complex in 2026 due to expanded SALT deductions, economic nexus enforcement, remote work compliance and evolving digital taxation rules. Businesses and tax professionals must adapt to changing multistate obligations and federal-state tax interactions.

Several major state and local tax trends are expected to shape the profession in 2026—and they are creating growing demand for professionals with advanced SALT expertise.

For attorneys, accountants and business leaders alike, staying ahead of these developments is essential. “Planning to manage SALT exposure is key to general business planning and also in M&A transactions, where it can often be a lurking problem. A tax professional needs to be able to stay abreast of the current SALT environment,” said Joan Arnold, professor of practice in the LLM and MT program at Villanova University Charles Widger School of Law.

One of the most significant federal developments reshaping the SALT landscape is the expansion of the individual SALT deduction under the One Big Beautiful Bill Act (OBBBA).

Beginning in tax year 2025, the SALT deduction cap increased from $10,000 to $40,000 for joint filers. For 2026 specifically, the cap rises to $40,400, with approximately 1% annual increases continuing through 2029. Starting in 2030, the cap is scheduled to revert to $10,000, creating a temporary window during which taxpayers may benefit from substantially higher deduction limits.

The expanded deduction is not without complexity. The benefit is reduced by 30% of the amount by which a taxpayer’s modified adjusted gross income (MAGI) exceeds certain thresholds—starting at $500,000 for joint filers in 2025 and increasing by 1% annually through 2029. Despite this phaseout, the law guarantees all taxpayers a minimum SALT deduction of $10,000.

Because of the longstanding limitations on individual SALT deductions, pass-through entity tax (PTET) workarounds have proliferated in recent years. The PTET deduction remains fully available under current law, providing relief for many business owners and professional service firms that rely on PTET regimes to navigate the federal SALT cap. PTET elections are now enacted in 36 jurisdictions.

For tax professionals, the expanded deduction creates both planning opportunities and compliance challenges. Clients in high-tax states such as New York, New Jersey and California need advisors who can help them evaluate whether itemizing now makes sense or whether the PTET deduction remains the better option—particularly given the scheduled 2030 sunset of the enhanced cap.

The OBBBA also introduced significant enhanced deductions and credits for businesses in areas such as research and development and investment in business assets. While many states begin with federal taxable income when computing state-level taxes, the treatment of these enhanced federal deductions and credits varies by jurisdiction.

Determining how each applicable state conforms—or does not conform—to the new federal provisions is critical for both tax planning and compliance. As states continue to respond legislatively and administratively, taxpayers and advisors must closely monitor evolving guidance.

Since the Supreme Court’s South Dakota v. Wayfair decision, states have steadily expanded their authority to tax businesses operating beyond traditional physical presence standards. Although companies have spent the past several years adapting, many state tax agencies are still refining enforcement strategies and expanding reporting requirements.

Marketplace facilitators, remote sellers and digital service providers remain under particular scrutiny. Businesses that once operated physically in only a handful of jurisdictions may now face filing—and potentially payment—obligations in dozens of states. Non-U.S. corporations with no physical presence in the United States are confronting similar issues.

At the same time, as technology evolves, state tax laws continue trying to keep pace.

States are paying closer attention to the taxation of software, cloud computing, streaming platforms and digital products. In many jurisdictions, lawmakers and tax authorities are reevaluating sourcing rules and determining how digital transactions should be taxed.

Artificial intelligence and emerging technologies may introduce additional challenges in the coming years as states seek new approaches to taxing technology-driven revenue, often without regard to a taxpayer’s physical presence.

Although hybrid and remote work arrangements are now common, states and taxpayers are still working through the resulting tax implications.

For businesses, the principal questions involve whether a remote employee creates nexus in a state and whether withholding and reporting obligations apply to employee compensation. For individuals, the focus is often on residency rules and obligations to pay state income taxes. Inconsistent guidance among jurisdictions only adds to the complexity.

The expanded federal SALT deduction may also prompt more employees to scrutinize their own state tax obligations, particularly those living in high-tax states who now stand to benefit more significantly from itemizing deductions.

Many states are becoming more aggressive in their audit and enforcement efforts.

Tax authorities are increasingly using data analytics and interagency information sharing to identify compliance gaps and select taxpayers for audit. Multistate businesses, pass-through entities and companies with remote employees may face heightened scrutiny in areas such as nexus, apportionment and sales tax collection.

As a result, organizations are placing greater value on professionals who can proactively identify risks and respond to evolving state tax regulations. For practitioners, advanced SALT knowledge is quickly becoming a competitive advantage.

The complexity of today’s tax environment—shaped by federal legislative changes, expanding state enforcement and the evolving digital economy—has increased demand for professionals with focused expertise in state and local taxation.

At Villanova University Charles Widger School of Law, the Graduate Tax Program helps students develop practical, real-world tax knowledge through advanced coursework and specialized certificate programs.

The program’s SALT certificate provides professionals with focused training in critical areas such as multistate taxation of businesses, sales and use tax, SALT planning for individuals and SALT controversy issues. Students gain insight into the legal, regulatory and business considerations shaping modern tax practice—including how federal developments like the OBBBA interact with state-level obligations and planning strategies.

“We’re seeing significant demand in the state and local tax area,” said Stephen Olsen, associate professor of practice and faculty director of Villanova University’s Graduate Tax Program. “The world of tax is constantly changing. There are hundreds of modifications to the Internal Revenue Code, new regulations every year and additional guidance issued on a continual basis. Because of that, we are constantly updating the classes we offer.”

For professionals seeking to expand their technical knowledge or differentiate themselves in a competitive market, earning a SALT certificate can provide meaningful career advantages.

The pace of change in state and local taxation shows no signs of slowing down.

Given the changes brought on by the OBBBA, nexus expansion, remote work compliance obligations and increased enforcement activity, 2026 is shaping up to be a pivotal year for SALT professionals and their clients. Businesses and individuals alike need advisors who can interpret evolving regulations, anticipate risk and develop strategic solutions across jurisdictions—while understanding how federal and state tax rules interact in an increasingly complex landscape.

As state and local tax trends become more sophisticated, specialized education and focused expertise will only grow in importance. For tax professionals looking to deepen their knowledge and position themselves for long-term success, advanced SALT training can provide both immediate practical value and lasting career impact.