Maria Koklanaris et al., State & Local Tax Takeaways From March, Law360 (Mar. 31, 2026):
As state legislatures raced in March to finish their sessions, governors increasingly enacted measures such as a tax on millionaires in Washington state and a Utah excise tax on commercial entities that publish digital content deemed harmful to minors.
Ferguson signed [Wash.] S.B. 6346, which levies a 9.9% tax on income above $1 million. … However, like the passage of tax on capital gains before it, the tax on millionaires will be subject to a previously announced suit.
The suit is coming from the Citizen Action Defense Fund and is spearheaded by former state Attorney General Rob McKenna, a Republican.
In a statement, the group said it expects to file suit within the next few days. It said the legislation is a graduated income tax and that it’s not permitted in Washington.
Across the country in Philadelphia, the mayor proposed a budget with significant tax changes. Pennsylvania’s largest city would impose a retail delivery tax on goods delivered, make changes to remote sellers’ local sales tax requirement, increase the city’s hotel tax and make other tax changes under a $7 billion 2027 budget proposed March 12 by Democratic Mayor Cherelle Parker.
Meanwhile, in Utah, Cox signed a measure to tax digital content deemed harmful to minors, which will impose the tax on commercial entities that are subject to statutory age verification requirements and publish or distribute such material, according to the bill text. The tax equals 2% of the sales price of amounts paid to or charged by such an entity to access digital images, digital audio works, digital books or gaming services, including streaming or subscriptions to access the content, regardless of the delivery method, according to the bill.
Washington is not the only state considering taxes on high earners.
Budget proposals put forward by New York State Senate and Assembly Democrats would raise income tax rates on high earners and corporations, with steeper increases than those under Democratic Gov. Kathy Hochul’s proposed budget plan.
Utah is not alone in considering taxes on digital content.
Business groups urged a Minnesota House panel March 24 to reject legislation that would cut the state’s sales tax rate and impose the tax on digital and nondigital advertising services, with publishing and broadcasting exempted.
After years of litigation, South Carolina’s highest court ruled March 18 that Amazon was required to collect South Carolina sales tax on goods that third-party merchants sold on its online platform before the U.S. Supreme Court’s Wayfair decision, the with state Supreme Court saying the company was engaged in the business of selling products.
