State conformity to many corporate provisions of the 2017 Tax Cuts and Jobs Act and last year’s tax package has been reflexive and automatic for almost a decade. When Congress accelerated depreciation or rewrote the treatment of research expenses, Republican-led states generally followed suit.
But some states are flinching now, with Florida being among the latest. The state House has moved to decouple from bonus depreciation and the preferred treatment of research and development expensing. That may represent something more significant than drafting choice.
Florida has structural reasons to pivot. When you must balance the budget every year, as Florida does, timing shifts aren’t abstractions that can be waved away on the promise of tomorrow’s juiced economy—they are today’s cash-flow realities.
The provisions at issue are two major parts of the 2017 law: Section 168(k) bonus depreciation and immediate expensing of R&D expenditures under Section 174. The former allows businesses to immediately deduct a large share of capital costs, while the latter determines how and when companies can deduct the costs of innovation. Both turn on the assumption that stronger investment will eventually offset upfront revenue losses.
Such tradeoffs might be manageable in Washington, DC, as Congress can smooth over the revenue gaps with borrowing and hope future growth—or future lawmakers—deal with the cost. But states don’t have that luxury.
That’s what makes Florida’s move notable. When a low-tax state with a reputation for fiscal conservatism isn’t willing to stick with automatic conformity, it raises questions about the underlying framework’s sustainability. If Florida is deviating, other states will also wonder why they should finance federal tax timing experiments they didn’t design and can’t deficit-finance.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts examined IRS Criminal Investigation’s ongoing challenges, a New York City tax break for building upgrades, and more.
The Exchange—It’s where great ideas on tax and accounting intersect.
By All Accounts
President Donald Trump’s $10 billion lawsuit against the IRS offers civic lessons that may be easy to miss, Danny Werfel says in By All Accounts.
Taxpayer privacy, how we invest in security, and presidential proximity to litigation decisions are “the fundamentals of a fair judicial process and a healthy tax system,” Danny writes. Everyone benefits when we stick to them rather than devolving into partisan politics, he adds. Read More
Insights
Bigger NYC Building Upgrade Tax Break Would Be a Modest Boon
New York Gov. Kathy Hochul’s (D) proposal to enhance New York City’s J-51 tax incentive for building upgrades should provide owners some relief, but potential property tax increases also must be considered.
Tariffs Are Increasing Strategic Value of This Powerful Incentive
When export margins compress from tariff absorption or price concessions, the permanent tax savings from the Interest-Charge Domestic International Sales Corporation become proportionately more valuable to cash flow and competitiveness.
India Budget Paved Way for Tech Investment with Tax Certainty
India’s Budget 2026–27 signals the government’s strategic intent to attract foreign capital, secure supply-chain resilience, and ensure that India remains a competitive technology hub.
IRS Investigators Are Fighting Mission Drift Alongside Criminals
The IRS Criminal Investigation Division is facing unprecedented pressure as it battles increasingly savvy cybercriminals during a time of upheaval and downsizing at the agency.
Future Global Tax Talks Must Clearly Define the Problem to Solve
Any new discussions about proposals to fix the digital economy’s tax challenges must start with an agreement on exactly what those challenges are. Without such an agreement, future work will continue to be an exercise in futility.
US Tax Carveout Is a Good Step Toward Needed Cross-Border Work
Although the OECD and US’ side-by-side agreement will help economic relations, both Pillar Two and the US tax system need further reforms.
Puerto Rico Shift From Zero to Low Tax Rate Enhances Viability
Puerto Rico’s introduction of a 30-year statutory horizon for the 4% tax rate reduces policy uncertainty and enhances modeling stability for long-term relocation and estate planning strategies.
Women in Accounting Should Get Timelier Busy Season Support
Accounting firms should address the profession’s female talent drain by ramping up and strategically deploying programs and policies designed to support women during busy season.
Learn to Self-Correct Fraud Before the IRS Knocks on Your Door
Taxpayers who may have committed fraud can take steps to reduce their risk and mitigate the consequences.
Technically Speaking
A proposal to reclassify California’s vehicle sales taxes as licensing fees would squeeze more taxpayer benefit out of the federal SALT deduction, but it would help only a small group of Californians, Andrew Leahey says in his latest Technically Speaking column.
“A refundable, income-targeted state credit tied to vehicle purchases would deliver more predictable benefits to lower- and middle-income households,” Andrew writes, adding that changing California’s “donor state” status would require a shift in how the state raises revenue. Read More
News Roundup
IRS CEO, Democratic Lawmakers Spar Over Privacy, Union
Democratic lawmakers pressed IRS CEO Frank Bisignano on the agency’s controversial data-sharing agreement and its termination of its union contract during the agency’s first public update amid the 2026 filing season.
Washington State Waives Penalties Under Digital Advertising Tax
Washington is temporarily waiving financial penalties for taxpayers struggling to comply with the state’s new tax on digital advertising and other technology services, acknowledging the transition has been “challenging for many businesses.”
Bringing It Home: New Tax Law Draws Companies’ IP Back to US
Several American multinationals are moving forward with plans to bring their valuable intangible property back home, enticed by new tax benefits the US has to offer.
IRS Closes in on Axing Biden-Era Partnership Oversight Rules
The IRS and the Treasury Department are getting closer to scrapping tougher oversight of a move that complex partnerships have used to reduce their tax obligations.
Tax Management International Journal
India Court Decisions on MLI Require Separate Notifications
India’s 2020 MLI implementation faces challenges due to court rulings requiring separate notification for each modified tax treaty.
FIFA 2026 World Cup Blows the Whistle on Complex Tax Risks
The 2026 World Cup highlights the complexities of applying international tax treaties and social security and totalization agreements in international sports.
Career Moves
Taylor Wessing Hires Grunewald as Partner in London Tax Group
Gemma Grunewald joined Taylor Wessing as a partner in its tax practice in London, the firm announced Wednesday.
DLA Piper Hires Nicolás Orezzoli as Tax Partner in Chile
Nicolás Orezzoli joined DLA Piper as a partner in its tax practice in Chile, the firm announced Thursday.
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