Insight

State Income Tax Rules

An introduction to the state taxation of banks and financial institutions

Mark Price

Mark Price

Principal, Financial Institutions & Products, KPMG US

Elizabeth B. L'Hommedieu

Elizabeth B. L'Hommedieu

Principal, Financial Institutions & Products, KPMG US

+1 614-249-1849

States have varying systems of taxing bank and other financial institutions that are frequently different from their income taxation of the general corporation. Some of the difficult state tax issues for financial institutions include entity classification, nexus, apportionment, and combined reporting. This article discusses who the financial institutions are for state tax purposes, explains the specific state income tax rules applicable to financial institutions, and data and technology challenges.