Over the past few months, governors from across the country have delivered their state-of-the-state addresses and presented state legislatures with proposed budgets for the upcoming fiscal year (collectively, “proposals”), with many including tax law changes affecting businesses and individuals.

While these proposals have been wide-ranging, and frequently with affordability top of mind, some trends have emerged, including:

• Conforming to and decoupling from provisions of Public Law 119-21, known as the “One Big Beautiful Bill Act” (OBBBA)
• Taxing foreign income
• Addressing tax incentives for data-center investment
• Imposing new taxes on digital advertising and social media platforms
• Reducing and eliminating personal income taxes
• Providing property tax relief
• Creating new and expanded tax credits

Meanwhile, governors in Alabama, Kansas, Kentucky, North Dakota, Tennessee and Wyoming did not mention new state tax changes in their proposals.

State legislatures are now acting on these proposals as numerous budget bills make their way through statehouses.

Tax credit and incentive proposals

The Illinois governor’s proposal would modernize the state’s research and development (R&D) tax credit so that it corresponds to the federal tax credit and could be transferred for a fee. A new tax incentive program, EDGE Essentials, would be created to provide benefits to independent grocery stores and pharmacies in a food or pharmacy desert.

The California governor’s proposal would (1) create a new light-duty zero-emission vehicle incentive program, (2) extend for five years the CalCompetes tax credit program at its current level of $180 million in annual allocations through FY 2032/2033, and (3) create a tax credit against liability for diesel excise taxes to incentivize the in-state production of sustainable aviation fuel.

The Pennsylvania governor’s budget plan would create new, and modify various existing, tax credits. A new Innovate in PA 2.0 program would provide $100 million to the state’s innovation economy via the sales of Insurance Premium Tax Credits. A new economic development tool, the PA First program, would provide financial assistance for workforce training, job creation and retention, land and building costs, and machinery and equipment. The budget would streamline credit and incentive programs administered by the Department of Community and Economic Development by eliminating redundant or ineffective programs and investing in programs that have a broader reach and impact. For example, the Waterfront Development Tax Credit, the Video Game Development Tax Credit and the Manufacturing Tax Credit would be eliminated, and the AdvancePA tax credit would be created. The budget proposal would modify several tax credit programs, including the semiconductor manufacturing tax credit program, regional clean hydrogen tax credit program, and the local resource manufacturing tax credit program.

Nebraska’s governor introduced the “Grow the Good Life Incentive” package, which will provide “significant tax credits to businesses of all sizes that grow their business and bring new, high paying careers here to Nebraska.” Such businesses would be eligible for a 10% tax credit for 10 years.

The Connecticut governor’s FY 2027 recommended budget adjustment would expand R&D tax credits to pass-through entities.

Delaware’s governor proposed creating a film tax credit, while the Hawaii governor’s proposed expanding the stackable film tax credits for productions hiring local crew and talent, and removing the credit cap on productions spending $60 million or more, including first-time streaming-service productions.

Maryland’s governor would enhance the state’s capacity to drive private investment through the DECADE (Delivering Economic Competitiveness and Advancing Development Efforts) Act of 2026. The DECADE Act would “overhaul the state’s economic development strategy, modernize programs with a focus on high-growth sectors, streamline business support, and cut ineffective incentives to spur growth and create jobs over the next decade.”

The Massachusetts governor’s FY 2027 budget proposal would create a new tax credit of up to $5,000 for Massachusetts farmers that donate excess food to food banks and pantries and a new tax credit to incentivize the use of sustainable aviation fuel by airlines through 2028.

West Virginia’s governor included in his budget proposal the expansion of the Historic Rehabilitation Tax Credit.

Implications

Over the next few months, state legislatures will consider these gubernatorial budget proposals among other legislative initiatives and priorities. While some of these budgets could be enacted as proposed or with some modifications, state lawmakers may advance different proposals or recommend further study before later reintroducing similar or modified gubernatorial proposals. With the 2026 primary and general elections approaching, quick legislative action on state budget and tax proposals is expected over the next few months.

The difference between a location decision that merely works and one that outperforms comes down to timing, leverage, and strategy. Incentives must be understood before commitments are made, modeled over the full life of the project, and negotiated in a way that aligns with how your business will actually hire, invest, and operate—regardless of shifting political or budget cycles.

That’s where disciplined advisory support matters.

As a site selection and business incentives advisor, I partner directly with executive teams to:

• Identify locations that align with long‑term operational, workforce, and cost objectives
• Evaluate and stress‑test incentives under current and pending policy changes
• Negotiate performance‑based incentive packages that protect ROI and support ongoing operations
• Preserve leverage throughout the process—so financial value isn’t left on the table

Whether you are early in evaluating expansion options or already navigating a complex project, the most important step is ensuring your decisions are grounded in strategy—not headlines or assumptions.

If you’re preparing to invest, expand, or relocate, now is the time for a conversation.

Let’s take a confidential, informed look at how location strategy and incentives can be structured to meet—or exceed—your financial goals today and over the life of your operation.

The best outcomes aren’t improvised.

They’re advised, negotiated, and built to last.