Accounting & CPA — Why State Tax Policy Wars Are Becoming CPAs' Next Big Challenge

Accounting & CPA · 2026-03-14

Today's developments reveal an emerging complexity in state-level tax policy that will require CPAs to adapt their multi-state tax planning strategies. Washington State's new millionaires tax is creating ripple effects across multiple sectors, from professional sports to general business operations, highlighting the growing importance of state-specific tax considerations in client advisory…

OPENING A new battleground is emerging in state-level tax policy that will fundamentally reshape how CPAs advise both individual and corporate clients. From Washington state's controversial millionaires tax to Mississippi's proposed tax exemptions for college athletes, we're witnessing the dawn of an era where state tax competition could dramatically complicate the professional landscape.

The implications of these emerging state-level tax policies extend far beyond their immediate jurisdictions. Washington's new millionaires tax has already sent ripples through the professional sports industry, with the Seattle Seahawks openly discussing its impact on player recruitment. But this is merely the tip of the iceberg. Business groups in Washington are raising legitimate concerns about interstate competitiveness, while simultaneously, we're seeing states like Mississippi potentially creating tax havens for specific sectors – in this case, college athletics.

This patchwork of diverging state tax policies creates both challenges and opportunities for accounting professionals. The traditional approach of treating state taxes as a secondary consideration after federal tax planning is becoming increasingly obsolete. We're entering an environment where state-level tax arbitrage could become a primary driver of business and personal financial decisions, particularly for high-net-worth clients and businesses with geographic flexibility.

The situation in college athletics, with Mississippi potentially eliminating income tax for college athletes, serves as a fascinating case study. While the immediate impact might seem limited to sports, it sets a precedent for state-level tax competition that could expand to other industries. Imagine states creating similar carve-outs for technology workers, healthcare professionals, or other high-demand sectors. The complexity this would add to tax planning and compliance is staggering.

WHAT TO WATCH Forward-thinking CPAs should closely monitor how these state-level tax initiatives evolve and potentially spread to other jurisdictions. The real question isn't whether more states will join this tax policy arms race, but rather how quickly it will escalate and which industries will be targeted next. As these policies proliferate, we may soon find ourselves in a position where mastery of interstate tax optimization becomes as crucial to our practice as federal tax expertise.