States Wary of Federal Tax Preemption in Reconciliation Bill

State tax administrators are paying close attention to interstate commerce language dropped into federal budget reconciliation legislation, concerned that Congress may take action to preempt their authority.

Tax officials said Tuesday they were surprised to see language lifted from the Interstate Commerce Simplification Act of 2025, HR 427, dropped into the House Judiciary Committee’s section of the GOP budget reconciliation plan, potentially impacting state taxing sovereignty. The language is scheduled for markup Wednesday.

“It’s 116 pages—it’s all immigration provisions, at least most of it dealt with immigration—but on page 115 of 116, this got dropped in,” Brian Oliner, ...