Sponsor
Pat Harrigan
Representative · R-NC
Representative · R-NC
The bill creates clearer, federal bright-line protections that shield remote sellers and reduce nexus-related uncertainty for businesses, but it will shrink some states' tax bases, risk competitive imbalances for in-state firms, and prompt state responses and transitional compliance costs.
Small businesses and remote sellers will be protected from state net-income and other business-activity taxes for a broad set of out-of-state activities (solicitation, digital goods/services, short transient visits), reducing their risk of creating state tax nexus.
Taxpayers and state tax administrators gain clearer, uniform federal standards and bright-line rules for physical presence and nexus, reducing litigation, audits, and compliance uncertainty.
Businesses and traveling employees with only short, de minimis in-state activity (under 15 days) will avoid creating state tax obligations, lowering compliance burdens for short-term travel and transient activity.
State and local governments could lose significant corporate and business tax revenue from out-of-state sellers, which may lead to spending cuts or tax shifts onto in-state residents and services.
In-state businesses that compete with out-of-state sellers may be disadvantaged if their rivals are shielded from state business taxes, worsening competitive imbalances.
States may respond to lost revenue by broadening other taxes or fees (e.g., sales taxes, payroll withholding or new levies), increasing tax complexity and potentially raising costs for residents and businesses.
Based on analysis of 5 sections of legislative text.
Sets a federal physical‑presence floor for State business taxation, broadens nexus safe harbors (including digital goods/services), and extends protections to other business activity taxes.
Official title: To regulate certain State taxation of interstate commerce, and for other purposes.
Introduced June 10, 2026 by Pat Harrigan · Last progress June 10, 2026
Creates a federal floor that limits when States can tax businesses for out-of-state activity and expands existing safe harbors for businesses with limited in‑state connections. It broadens protected in‑state activities (including many digital goods and services), extends protections beyond net income taxes to other business activity taxes, and sets a physical‑presence rule as the minimum jurisdictional standard for State business taxation. Also requires consistent apportionment treatment for combined or consolidated groups and preserves certain State authorities (for residents, in‑State entities, combatting abusive arrangements, and combined reporting). The law takes effect for taxable periods beginning on or after January 1, 2026 (with some earlier-date references preserved for certain provisions).