The Combined Reporting Amendment Act of 2026 proposes a transition in the District of Columbia's tax law from the Joyce method to the Finnigan method of apportionment for combined reporting. This legislation amends D.C. Official Code 47-1805.02b, introducing a new definition for "combined group" as a group of persons required to file a combined return, and establishing a new section that outlines the requirements for filing such returns, including joint and several liability for tax obligations. The bill also repeals existing sections related to combined reporting and clarifies how combined groups calculate their taxable income, emphasizing the requirement for all members of a unitary business to file a combined return and granting the Chief Financial Officer authority to require additional reporting factors.

Moreover, the act introduces a new section, 47-1810.07A, allowing unitary group members to elect for a waters-edge reporting method starting from tax years after December 31, 2025, which limits the income and apportionment factors considered based on incorporation status and income sources. It also modifies the treatment of net operating losses and tax credits, repeals provisions related to Subpart F income, and clarifies the tax treatment of dividends from wholly-owned subsidiaries. The changes aim to streamline tax reporting for combined groups and enhance compliance with District tax laws, with projected revenue increases of $54.7 million starting in fiscal year 2028.