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As the world welcomes 2026, a series of federal and state tax changes is influencing business growth in the United States. This shift is prompting companies to rethink their long-term investment and location decisions. This year, changes in federal and state taxes went beyond routine adjustments. They are altering cost structures, influencing capital allocation, and forcing executives to reassess where expansion makes the most financial sense. For many businesses, tax policy is becoming a decisive factor in determining growth and relocation.
Federal Tax Reform and Accelerated Depreciation
At the federal level, the reinstatement or expansion of accelerated depreciation is now one of the most consequential developments. Under this framework, companies can immediately deduct 100% of qualifying capital investments, including real estate, machinery, and technology. The policy has been designed to reduce the after-tax cost of investment and free up capital sooner.
The immediate impact of this policy is increased cash flow. Businesses that might otherwise delay upgrades or expansions now have the flexibility to move forward more quickly. For some, this means investing in new facilities, but for others, it enables modernization projects or technology adoption that supports productivity and job creation. While the provision does not change where a company operates on its own, it amplifies the importance of local tax environments that either complement or offset federal incentives.
State-Level Changes: Winners and Losers
The amplification is evident at the state level, where tax changes in major markets are creating clear contrasts. In New York, a planned 50% increase in the Metropolitan Commuter Transportation Mobility Tax is expected to raise costs significantly for employers. For some companies, the increase could amount to tens of thousands of dollars per quarter, adding to already high operating expenses.
For California, the challenge is different. A retroactive cap of $5 million per year on tax credits is hitting capital-intensive industries hard. Companies that once structured investments around anticipated credits are now reassessing project viability. Together, these developments are accelerating conversations about whether remaining in high-tax regions continues to align with long-term business strategy.
Migration to Business-Friendly States
In contrast, states such as Florida, Texas, and Arizona are emerging as beneficiaries in 2026. These jurisdictions offer lower taxes, fewer regulatory surprises, and active incentive strategies aimed at attracting employers. Florida has drawn attention following its recent elimination of the business rent tax, a move that directly reduces overhead for companies leasing space.
For businesses weighing relocation or expansion, predictability has become as important as tax rates themselves. States that provide a stable policy environment are increasingly seen as safer bets for long-term investment.
Beyond Taxes: What Else Drives Site Selection?
Taxes are not the only factor determining site selection. Companies are also evaluating workforce availability, infrastructure quality, and the strength of regional collaboration. Universities are playing a growing role as workforce pipelines, supplying talent and partnering with employers on training and innovation. Regions that align economic development efforts with education systems are gaining an edge.
The “Live, Work, Play, Learn” Model
This broader evaluation has led to a more holistic framework for decision-making. Quality of life, governance, education, and innovative ecosystems are now integrated heavily into corporate calculations. As John Boyd, a principal of The Boyd Company, observes, “Live, work, play is a mandate for so many corporate site selection projects and so many real estate development projects… but I said, ‘it’s live, work, play, learn’ — especially today with the need for upskilling.”
The Importance of Understanding Tax Changes
The tax changes scheduled for 2026 are more than line items in a budget. They are powerful levers modifying corporate geography. Regions that pair competitive tax policy with workforce development and sound governance are better positioned to capture the upcoming wave of business investment.
