Monthly US Tax Bulletin - March 2026

Key highlights:

Federal taxes

• Under Notice 2026‑17, the Treasury and IRS propose simplifying Section 987 compliance by introducing an optional equity and basis pool method, narrowing loss suspension rules, streamlining loss recognition, providing transition relief for hedges, and offering simplified rules for CFCs.
• Notice 2026‑7 provides interim Corporate Alternative Minimum Tax (CAMT) relief by expanding favourable Adjusted Financial Statement Income (AFSI) adjustments, addressing potential CAMT exposure under beneficial One Big Beautiful Bill Act (OBBBA) provisions, and signalling a revised regulatory framework to reduce compliance burdens for large corporations.
• The IRS has proposed eliminating the partnership transactions of interest regulations, reversing prior reporting requirements for basis‑shifting transactions and retroactively relieving taxpayers and advisors of burdensome disclosure and compliance obligations.
• Notice 2026‑16 outlines Treasury and IRS plans to implement a new election, allowing up to 100% depreciation for qualifying production property placed in service after 4 July 2025 and before 31 December 2031, and provides interim guidance on eligibility, calculation, and election mechanics until regulations are issued.
• The IRS issued interim guidance in Notice 2026‑15 clarifying how to assess prohibited foreign entity involvement for clean‑energy credits, including rules for calculating material assistance, applying interim safe harbours, and outlining penalty implications for inaccurate or misleading supplier certifications, pending further guidance.

State taxes

• New York’s FY 2027 Executive Budget extends the 7.25% corporate tax rate through 2030 while decoupling from the key OBBBA provisions on depreciation, interest limits, R&E expensing, and Section 179, creating divergent federal, NYS, and NYC tax treatments.
• Louisiana will begin enforcing the underpayment of estimated tax (UET) penalty for corporations starting in 2026, following the repeal of the corporate franchise tax and the separation of income tax reporting.
• Kentucky clarified that the sales and use tax applies to prewritten computer software, including AI‑enabled and SaaS offerings, regardless of delivery method, unless the software qualifies as custom‑developed for a single purchaser.
• Maryland’s proposed Code of Maryland Regulations (COMAR) implement a new 3% sales and use tax on specified data, IT, and software services, including SaaS, effective 1 July 2025, while clarifying rate distinctions, exemptions, and the scope of the state’s digital advertising tax.
• The District of Columbia enacted a temporary emergency act retroactive to 1 January 2025, decoupling from key federal corporate tax provisions affecting R&E, interest limits, depreciation, and §179 expensing.

Monthly US Tax Bulletin - March 2026

The March 2026 edition of the Grant Thornton Bharat Monthly US Tax Bulletin provides a concise summary of recent key developments in federal and state taxes in the US.

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