State & Local Tax Compliance and Planning

SALT stands for State and Local Tax, encompassing income taxes, franchise taxes, sales taxes, excise taxes, and other taxes imposed at the state and local level. For businesses operating in multiple states, SALT compliance is complex and high-risk: every state has its own tax regime, rates, filing requirements, and audit processes. GreenGrowth CPAs has deep experience in every major market, helping businesses minimize SALT exposure while maintaining full compliance across all operating jurisdictions.

Nexus is the connection between your business and a state that triggers a sales tax collection obligation. Nexus can be created by physical presence (employees, offices, inventory), economic activity (revenue thresholds), or other factors depending on the state. Failing to collect and remit sales tax where you have nexus creates significant audit exposure. GreenGrowth CPAs conducts nexus analyses, manages sales tax registration, and ensures compliance across all states where your business has an obligation.

Yes. GreenGrowth CPAs specializes in cannabis state and local tax compliance, including cannabis excise tax, Transaction Privilege Tax, sales tax, and local cannabis taxes across all active cannabis markets. Our cannabis SALT expertise is particularly valuable for multi-state operators who face different tax structures, rates, and compliance requirements in each state they operate.

State income tax is levied on a business's taxable net income, similar to the federal income tax. Franchise tax is a fee charged for the privilege of doing business in a state, and is often calculated based on revenue, net worth, or a flat fee rather than income. Some states impose both. Several states (like Texas and Delaware) have franchise taxes but no corporate income tax. Multi-state businesses need to track and file for both where applicable.

Since the South Dakota v. Wayfair Supreme Court decision in 2018, states can require businesses to collect and remit sales tax based on economic activity alone, without any physical presence. Most states have set thresholds of $100,000 in sales or 200 transactions per year. For SaaS and software companies, this means you may have sales tax obligations in dozens of states even without a single employee or office there. A nexus review is essential before scaling revenue.

M&A transactions can expose hidden SALT liabilities including unpaid sales tax, unregistered nexus in multiple states, unfiled returns, successor liability (where a buyer inherits the seller's tax debts), and unclaimed property obligations. These liabilities can reduce deal value significantly or delay closing. GreenGrowth CPAs conducts pre-close SALT due diligence to identify and quantify exposure before the deal closes. For full deal support, see our transaction advisory services.

Arizona has a flat individual income tax rate of 2.5% for 2026, the same single rate that has applied to every filing status since tax year 2023. On purchases, Arizona does not have a traditional sales tax. It levies a transaction privilege tax, with a state rate of 5.6% on retail sales, plus local taxes from counties and cities. The corporate income tax rate is 4.9%.

California's statewide base sales and use tax rate is 7.25%. Most cities and counties add voter-approved district taxes on top of that, so the rate a shopper pays depends on where the sale takes place, and many areas are well above the base. In short, it is 7.25% plus local taxes. The California Department of Tax and Fee Administration publishes current rates by city and county.

Colorado's individual income tax is a flat 4.4% of federal taxable income, after state additions and subtractions, and that is the current rate for 2026. Corporations pay the same 4.4% rate. Voters will decide two measures in November 2026: Amendment 87 would replace the flat tax with graduated rates, and Proposition 136 would cap the rate at 4.4%. Either change would apply starting in 2027.

Connecticut has no separate capital gains rate. Capital gains are included in income and taxed at the regular personal income tax rates, which run from 2% to 6.99% for 2026. The top 6.99% rate applies to taxable income over $500,000 for single filers and $1,000,000 for joint filers.

The Illinois state sales tax rate on general merchandise is 6.25%, plus local taxes imposed by cities, counties and other districts, so combined rates vary by location. Starting January 1, 2026, Illinois eliminated its 1% state tax on groceries. Many municipalities and counties have adopted their own 1% local grocery tax, so food purchases may still be taxed depending on where you shop.

For 2026, New York State income tax rates range from 3.9% to 10.9%. The state lowered the rates on its five lowest brackets by 0.1 point for 2026, with another cut scheduled for 2027, so the bottom rate fell from 4% to 3.9%. High earners pay 10.3% on income over $5 million and 10.9% over $25 million. New York City and Yonkers residents also owe local income tax.

The Texas state sales and use tax rate is 6.25%. Cities, counties, transit authorities and special purpose districts may add up to 2% in local taxes, so the maximum combined rate is 8.25%. Texas has no personal income tax.

Washington taxes long-term capital gains of individuals at 7% on gains above an annual standard deduction, which was $278,000 for 2025 and is adjusted for inflation each year. Starting with tax year 2025, an additional 2.9% applies to taxable gains over $1 million, for a 9.9% top rate. Sales of real estate and retirement accounts are generally exempt. Washington still has no tax on wages in 2026.