State and local tax policy rarely gets invited to the party, but in 2025 it kicked down the door, grabbed the microphone, and started explaining federal conformity rules to everyone near the snack table. Greenberg Traurig’s GeTtin’ SALTy, hosted by Nikki Dobay, gave tax professionals a useful front-row seat to that action, especially in its 2025 outlook conversation with MultiState Associates CEO Joe Crosby and later year-end review of the biggest SALT developments.

The big story was not one single tax change. It was the collision of federal tax reform, state budget pressure, digital economy taxation, pass-through planning, litigation risk, and “SALT-adjacent” fees like Extended Producer Responsibility programs. In plain English: states needed money, taxpayers needed clarity, and the tax code once again chose to communicate like a raccoon trapped in a filing cabinet.

This 2025 SALT policy review breaks down the year’s major themes, what businesses and high-income taxpayers should watch, and why the phrase “state conformity” may be the least glamorous phrase with the biggest impact on your tax bill.

What “SALT” Means in 2025

SALT stands for state and local tax, a broad category covering state income taxes, sales and use taxes, property taxes, gross receipts taxes, excise taxes, and local levies. For individuals, SALT often brings to mind the federal itemized deduction for state and local taxes paid. For businesses, it means nexus, apportionment, taxability, credits, audits, pass-through entity tax elections, and multistate compliance calendars that multiply like houseplants in a sunny window.

The 2025 environment made SALT more important because federal tax law changed dramatically while states faced their own fiscal choices. Some states moved toward tax cuts. Others looked for revenue. Many had to decide whether to conform to federal changes or decouple from them. That decision can determine whether a federal deduction helps at the state level, disappears at the border, or returns wearing a different hat.

The GeTtin’ SALTy 2025 Outlook: Budget Pressure Meets Political Reality

In the January 2025 GeTtin’ SALTy episode, Nikki Dobay and Joe Crosby framed the year around shifting political dynamics, state fiscal year 2026 budgets, possible deficits, social program costs, tax increases, worldwide combined reporting, digital advertising taxes, and continued interest in income tax reductions.

That mix matters because SALT policy is not created in a spreadsheet vacuum. It is created by lawmakers who must balance revenue, competitiveness, voter expectations, and sometimes a very strong desire to call something a “fee” instead of a “tax.” When state budgets tighten, tax policy gets creative. “Creative,” in tax language, often means “your compliance team needs another spreadsheet.”

The Federal Plot Twist: OBBBA and the SALT Cap

The One Big Beautiful Bill Act became the tax-policy thunderclap of 2025. For individual taxpayers, one headline change was the increase in the federal SALT deduction cap. The old $10,000 limit, created by the Tax Cuts and Jobs Act, was increased to $40,000 for 2025 for most filers, with a $20,000 cap for married taxpayers filing separately. The benefit begins phasing down for taxpayers with modified adjusted gross income above $500,000, or $250,000 for married filing separately.

That sounds simple until you add the rest of the tax code. The higher SALT cap may encourage more taxpayers in high-tax states to itemize. But the standard deduction also increased for 2025, reaching $15,750 for single filers, $31,500 for married filing jointly, and $23,625 for heads of household. That means taxpayers must run the numbers, not just cheer because the cap got taller.

Here is a practical example. A married couple in New Jersey pays $18,000 in property taxes and $24,000 in state income taxes. Their eligible SALT total is $42,000. Under the old $10,000 cap, most of that deduction disappeared for federal purposes. Under the 2025 $40,000 cap, they may be able to deduct $40,000 if they itemize and are not phased down. That does not mean they save $30,000 in taxes; it means their taxable income may fall by up to $30,000 compared with the old cap. The actual tax savings depends on their marginal rate, other deductions, and filing profile.

Why the SALT Cap Still Matters to Businesses

The individual SALT deduction cap gets the headlines, but businesses care about another layer: pass-through entity tax, or PTET, elections. After the original federal SALT cap, many states adopted PTET regimes allowing certain partnerships and S corporations to pay state income tax at the entity level. This can produce a federal business deduction that is not limited by the individual SALT cap.

The higher 2025 SALT cap does not automatically make PTET planning irrelevant. Owners may still benefit depending on state rules, entity structure, income level, residency, credit treatment, and federal limitations. In other words, this is not a “set it and forget it” toaster. It is a multistate tax planning tool that should be reviewed annually.

State Conformity: The Quiet Giant of 2025 SALT Policy

One of the biggest issues discussed across the SALT world in 2025 was state conformity to federal tax changes. Some states automatically follow the Internal Revenue Code as it changes. Others conform to the code as of a fixed date. Some pick and choose. This means a federal tax benefit may flow into state taxable income in one jurisdiction but be modified, delayed, or denied in another.

OBBBA restored or expanded several major federal business provisions, including 100% bonus depreciation for qualifying property and immediate expensing for certain domestic research and experimental expenditures. For multistate businesses, the question became: does the state follow? If not, companies may need separate depreciation schedules, state addbacks, special elections, and updated deferred tax calculations.

This is where SALT policy becomes less like a single tax return and more like air traffic control. A manufacturer buying equipment in 2025 may enjoy federal expensing but face different state treatment in California, New York, Pennsylvania, or other jurisdictions. The tax department’s job is to land all the planes without letting one state conformity rule clip the wing.

Digital Advertising and the Expanding Sales Tax Base

Digital taxation was one of the liveliest 2025 SALT themes on GeTtin’ SALTy. States have long relied on sales taxes designed for a goods-based economy. The modern economy sells software, streaming access, cloud tools, data processing, digital advertising, website services, and subscription platforms. State tax systems are trying to catch up, sometimes gracefully and sometimes like a printer jam with legislative intent.

Several states expanded or considered expanding taxes on digital goods and services in 2025. Maryland enacted a 3% sales tax on certain technology services, including data processing, software publishing, and web hosting. Washington expanded retail sales tax coverage to include services such as digital advertising, custom software development, website development, and information technology services, effective October 1, 2025.

The policy argument is straightforward: if the economy has moved from physical goods to digital services, states risk losing revenue unless their tax base modernizes. The counterargument is equally strong: taxing business inputs, digital advertising, or software can increase pyramiding, distort pricing, create sourcing headaches, and invite constitutional challenges.

Litigation Risk: Digital Taxes Enter the Courtroom

Digital advertising taxes are not merely a legislative trend; they are litigation magnets. Maryland’s digital advertising tax has faced years of legal challenges, including constitutional and federal-law arguments. Washington’s 2025 expansion also drew lawsuits challenging whether the tax discriminates against internet-based advertising and violates federal restrictions on discriminatory electronic commerce taxation.

The outcome of these cases matters beyond one state. If courts allow broad digital advertising taxes, other states may feel emboldened. If courts strike them down, lawmakers may shift toward broader sales tax base expansion, narrower technology service taxes, gross receipts taxes, or industry-specific fees. Either way, businesses selling digital products or advertising services should assume the map will keep changing.

Worldwide Combined Reporting: The Corporate Tax Debate That Refuses to Nap

Another policy issue highlighted in the 2025 SALT conversation was mandatory worldwide combined reporting. Under combined reporting, related corporations may be required to file as one unitary group so income cannot be shifted artificially among affiliates. Worldwide combined reporting goes further by including foreign affiliates, not just domestic entities.

Supporters argue that worldwide combined reporting limits profit shifting and better captures the economic reality of multinational businesses. Opponents argue that it can overreach, create double taxation concerns, increase compliance costs, and make a state less competitive for investment. In 2025, the debate gained renewed attention as states searched for revenue and reassessed multinational corporate taxation.

For corporate taxpayers, the practical lesson is simple: watch combined reporting proposals early. By the time a bill is enacted, the tax department may already be behind on data gathering, modeling, and controversy planning.

Income Tax Cuts Did Not Disappear

Despite budget pressure, many states continued to pursue income tax reductions in 2025. Some lowered individual income tax rates. Others reduced corporate rates, expanded standard deductions, or continued previously scheduled phase-downs. The political appeal is obvious: tax cuts are easier to campaign on than “Please enjoy this carefully structured conformity addback.”

But rate cuts do not always mean tax simplicity. A state may reduce its top rate while broadening the base, limiting credits, changing net operating loss rules, or adjusting apportionment. Businesses and individuals should look at the full structure, not just the headline rate. A smaller rate applied to a larger base can still produce a surprisingly chunky tax bill.

Extended Producer Responsibility: SALT-Adjacent, but Very Real

One of the more interesting 2025 developments was the rise of Extended Producer Responsibility laws for packaging. EPR programs shift the cost of managing packaging waste from municipalities to producers. For consumer products companies, these laws can require registration, reporting, membership in producer responsibility organizations, and payment of fees based on packaging volume, material type, recyclability, or other factors.

By late 2025, multiple states had comprehensive packaging EPR laws, including Maine, Oregon, Colorado, California, Minnesota, Maryland, and Washington. These are not always labeled as taxes, but from a business planning perspective they can feel tax-like: mandatory, state-specific, data-heavy, and capable of producing real cost exposure.

That is why SALT teams increasingly need to coordinate with sustainability, supply chain, legal, finance, and product teams. If a company cannot accurately track packaging materials by state, it may struggle to comply. The future of SALT is not just income tax returns; it is data architecture.

What Businesses Should Do After the 2025 SALT Review

1. Revisit Nexus and Taxability

Economic nexus rules remain crucial after South Dakota v. Wayfair. Companies selling across state lines should review where they have sales tax collection duties, income tax filing duties, gross receipts tax exposure, and local tax obligations. Digital sellers should pay special attention because states are expanding definitions faster than software companies rename their pricing tiers.

2. Model State Conformity Separately

Do not assume that federal tax savings equal state tax savings. Bonus depreciation, R&E expensing, interest limitations, net operating losses, international tax changes, and credits can all receive different state treatment. Build state-by-state models before making large capital or accounting-method decisions.

3. Review PTET Elections

Pass-through entity tax elections should be reviewed even with the higher federal SALT cap. The right choice depends on owners’ residency, state credit rules, income levels, federal deduction value, administrative cost, and timing. A PTET election can be helpful, but it is not a magic wand. It is more like a very useful wrench: excellent in the right situation, awkward in the wrong one.

4. Track Digital Tax Legislation

Software, SaaS, advertising, data processing, and digital content businesses should monitor legislation in states where customers are located. A service that was not taxable last year may be taxable this year, partially taxable next year, and the subject of litigation the year after that.

5. Treat EPR as a Finance Issue

EPR compliance should not live only in the sustainability department. Fees, reporting, penalties, and market-access risk belong in broader financial planning. Packaging data may become as important as sales data for certain companies.

Experience-Based Insights: What 2025 SALT Policy Feels Like in Practice

The practical experience of following 2025 SALT policy is that tax teams are no longer just interpreting rules after they are passed. They are watching bills, modeling possible outcomes, advising operations, and preparing for litigation-driven uncertainty. The tax function has moved closer to strategy, and honestly, it deserved a better chair at the table years ago.

One common experience for multistate businesses in 2025 was the “federal good news, state question mark” problem. A federal provision may allow immediate expensing, but the state answer depends on conformity. Finance leaders may ask, “How much tax do we save?” and the honest SALT answer is, “Federally, a lot; by state, please enjoy this 17-tab workbook.” That is not evasive. It is reality.

Another lived challenge was communication. Business leaders often understand federal tax headlines because they appear in national news. State tax changes, however, may arrive through technical bulletins, budget bills, administrative notices, or quiet legislative amendments. A company may learn that a digital service is taxable only after contracts, invoices, and systems have already been designed. Retrofitting tax compliance is possible, but it is rarely elegant. It is like adding plumbing after the housewarming party.

For individual taxpayers, the higher SALT cap created optimism, especially in high-tax states. But the real planning conversation was more nuanced. Some households who previously claimed the standard deduction may now compare itemizing. Others may find that the phase-down limits the benefit. Homeowners with large property taxes and state income taxes may gain meaningful federal savings, while middle-income taxpayers with modest SALT payments may see little change. The experience is a reminder that tax policy headlines are written for everyone, but tax benefits are calculated one return at a time.

For pass-through business owners, 2025 reinforced the need for coordinated planning. PTET elections, estimated payments, owner-level credits, nonresident withholding, and state filing requirements can interact in surprising ways. The higher SALT cap may reduce the urgency for some owners, but it does not eliminate the value of entity-level planning. The smartest approach is not to assume the prior-year election remains optimal. It is to run fresh numbers.

Digital businesses had perhaps the most dynamic year. Companies selling SaaS, data tools, online advertising, web services, and platform access faced an expanding patchwork of taxability rules. The policy trend is clear: states want the sales tax base to reflect the digital economy. The compliance trend is also clear: taxpayers need better product mapping, customer location data, exemption certificate processes, and contract language. A vague invoice description like “platform access” may no longer be enough. In 2025, words on invoices started carrying more tax weight than some people expected.

EPR programs created a different kind of experience. They forced companies to connect tax-style compliance with environmental reporting. Packaging weight, material composition, recyclability, and state sales channels became finance-relevant data points. This is a major shift. Businesses that once treated packaging as a marketing or logistics detail now have to treat it as a compliance cost driver. The box is no longer just a box; it is a potential fee base wearing cardboard.

The biggest lesson from 2025 is that SALT policy rewards early awareness. Waiting until filing season is too late for many decisions. Capital investment, product design, pricing, customer contracts, entity structure, and packaging choices may all have state tax consequences. Tax professionals who followed discussions like GT’s GeTtin’ SALTy were better positioned because they saw the policy weather forming before the storm reached the returns.

In practice, a strong 2025 SALT process included monthly legislative monitoring, quarterly state conformity updates, annual PTET modeling, sales taxability reviews for new products, audit-risk assessments, and cross-functional meetings with finance, legal, IT, and operations. That may sound like a lot, but it is cheaper than discovering a state tax issue during diligence, audit, or financial statement close. Tax surprises are like raccoons in the attic: the longer you ignore them, the more expensive they get.

For 2026 and beyond, the experience of 2025 suggests that SALT will remain one of the most active areas of tax policy. States will continue balancing competitiveness against revenue needs. Digital taxes will keep evolving. EPR programs will mature. Federal conformity will remain messy. Litigation will shape what states can tax and how they can tax it. The best strategy is not panic; it is preparation, documentation, and regular review.

Conclusion: 2025 Was the Year SALT Got Loud

The 2025 SALT policy review on GT’s GeTtin’ SALTy shows a tax landscape shaped by federal reform, state budget pressure, digital transformation, litigation, and new fee regimes. The higher federal SALT cap gave many taxpayers something to celebrate, especially in high-tax states. But for businesses, the deeper story was complexity: conformity, PTET elections, digital taxability, worldwide combined reporting debates, and EPR obligations.

The winning move is not to memorize every state rule. That is how spreadsheets become haunted. The winning move is to build a process: monitor developments, model state-specific effects, document positions, coordinate teams, and revisit assumptions often. In 2025, SALT policy proved that state and local tax is no longer a back-office detail. It is a boardroom issue, a pricing issue, a technology issue, and sometimes an environmental compliance issue wearing a tax costume.

And that is why GeTtin’ SALTy remains a useful lens. It turns the messy, fast-moving world of SALT policy into a conversation that tax professionals, business leaders, and curious policy watchers can actually follow. That may not make state tax simple, but it does make the chaos a little more navigableand occasionally, just salty enough to be fun.