Business Activity Tax Simplification Act of 2026
Sponsored By: Representative Harrigan, Pat [R-NC-10]
Introduced
Summary
Would restore a strict physical-presence nexus for state business taxes. The bill would also extend similar protections to digital goods and digital services and lay out specific rules for how affiliated companies are taxed across state lines.
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- Digital sellers: The bill defines "digital good" and "digital service" and treats electronic sales and services like other transactions for solicitation rules. It also clarifies that leasing or licensing computer software is excluded from the tangible personal property rule in certain provisions.
- Multi-entity businesses: When affiliates are included in a state's tax base the bill requires apportionment using an aggregate denominator and a numerator that counts only in-state factors for taxable entities. This changes how group returns and attribution work for related companies.
- State tax limits and exceptions: The bill sets a minimum physical-presence standard and a de minimis rule that ignores presence under 15 days in a taxable year. It preserves state powers to pursue illegal or sham transactions and to require combined reporting and would apply to taxable periods starting January 1, 2026.
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Bill Overview
Analyzed Economic Effects
2 provisions identified: 2 benefits, 0 costs, 0 mixed.
Lower state tax reach for businesses
This bill would stop a State from taxing a business's net income or similar business-activity tax unless the business has a physical presence in the State during the tax period. Physical presence would include a person or assigned employees in the State, a non-employee agent who only works for you in-state, or leasing or owning tangible personal or real property. Being in the State under 15 days in a tax year would not count as presence unless State law sets more days. The bill would extend PL 86-272 style protections to remote solicitations, remote fulfillment, and sales of digital goods and digital services delivered from outside the State, and it would provide independent contractor safe harbors. It would also extend the same prohibitions to other business-activity taxes and give statutory definitions for digital goods and services for years starting January 1, 2019. The main physical-presence rules would apply for tax years starting January 1, 2026.
Limits on state combined business taxes
This bill would change how States compute combined or consolidated business income for related companies. States would have to use the same method that applies to similarly situated businesses. If an apportionment formula is used, the denominator would include all group members' factors, but the numerator would count only the in-state factors of members the State may tax under this bill. These rules would apply for tax years starting January 1, 2026.
Sponsors & CoSponsors
Sponsor
Harrigan, Pat [R-NC-10]
NC • R
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov