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With only a handful of state legislatures still in session for the remainder of the year, this review examines the year’s environmental and fiscal policy trends and offers a preview of what to expect in 2026.
Maryland and Washington are the latest states to create EPR packaging programs
Extended producer responsibility (EPR) programs have become a popular solution to managing the end-of-life of consumer packaging materials. This year, lawmakers in Maryland (MD SB 901) and Washington (WA SB 5284) enacted comprehensive EPR packaging bills, bringing the number of states with packaging programs to seven (California, Oregon, Colorado, Maine, Minnesota, Maryland and Washington). EPR packaging systems provide challenging and expensive compliance obligations for the business community, but the new programs in both Maryland and Washington represent a more uniform and sustainable model of EPR when compared to other states like California, Maine and Oregon.
For 2026, recycling experts expect bills to be considered in Hawaii, Massachusetts, New York, New Jersey, Connecticut and Rhode Island. EPR needs assessments have been established in Hawaii and Rhode Island, while policymakers in Massachusetts have recommended EPR legislation.
PFAS remediation continues to be a key environmental priority for states
The removal of perfluoroalkyl and polyfluoroalkyl substances (PFAS) found in drinking water has been a priority for states in recent years. PFAS, also known as “forever chemicals,” do not break down naturally, can accumulate over time, are toxic at small levels, and are found in a wide range of products such as food packaging, plastics, cookware, and cleaning products to name a few.
In 2025, 27 bills addressing PFAS were enacted in 13 states. Illinois lawmakers enacted a bill (IL SB 727) requiring the stateʼs Pollution Control Board to establish maximum contaminant levels (MCLs) for the stateʼs community water supplies. These new laws may also affect transactional due diligence, and prospective buyers and lenders may now need to consider a site’s potential soil contamination. Next year, expect states to continue introducing legislation establishing committees to study PFAS remediation and the impact PFAS has on public health and the environment. As federal regulators loosen PFAS regulations, states have acted to fill the void.
More states experience challenging fiscal outlooks, but most states have strong revenue
After years of high revenue collections and federal assistance during the pandemic era, revenue growth is beginning to slow. Furthermore, states will be facing long-term budgetary and revenue challenges due to federal funding cuts in SNAP and Medicaid, as well as changes to the Internal Revenue Code that were enacted by the One Big Beautiful Bill Act (OBBBA). Some states have issued reports that estimate the effects of the OBBBA and are showing more cracks in their fiscal stability.
As of September 2025, nine states are in a “challenging” fiscal outlook, and 13 states are in a “conditional” fiscal outlook, according to data collected by MultiState. The number may increase as the effects that federal legislation has on state budgets become clearer, as well as the direction the economy takes. However, most states remain in a solid position, with strong rainy-day funds and recurring surpluses.
Idaho, Kansas, and Utah lower their corporate income tax rate
Several states considered bills to alter the corporate income tax rate either by lowering the rate, a gradual reduction over time, or via revenue triggers where the rate is reduced based on collections. Idaho, Kansas and Utah were the only states, however, to enact an income tax rate reduction. Idaho’s bill (ID HB 40) reduced the corporate income tax rate from 5.695% to 5.3%. Utah reduced (UT HB 106) its corporate income tax from 4.55% to 4.5% and Kansas’ KS SB 269 reduced its tax rate based on revenue collections.
Conversely, lawmakers in Washington imposed a B&O surcharge on businesses with taxable income over $250 billion (WA HB 2081). Connecticut’s budget bill (CT HB 7287) extended its corporate surcharge, a rate that in effect is equal to an additional 0.75 percent, for an another three years.
As the 2026 session approaches, many states are in a more precarious fiscal condition than in 2024, despite strong revenue levels compared to pre-pandemic. Tax increases to monitor next year include raising tax rates or pausing scheduled rate cuts, expanding the sales tax base to additional goods and services, selective conformity to the OBBBA, or looking to tax new revenue sources, such as data and advertising. Taxes on the digital economy, in particular, have been widely debated in the past and are likely to continue piquing the interest of lawmakers.
For more information contact gpp@icsc.com.