Territorial Tax Parity Act of 2023

The Territorial Tax Parity Act of 2023 seeks to update federal tax rules to ensure that residents and businesses in U.S. territories—including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands—are treated more equitably under the tax code. The bill clarifies how income is sourced, specifically ensuring that income is only taxed as U.S.-based if it is directly linked to a physical office or place of business within the 50 states. By refining these definitions, the legislation aims to reduce tax ambiguities for territorial residents and encourage local economic investment by preventing certain types of income from being unfairly categorized for federal tax purposes.