Tax implications are the consequences of a specific financial transaction on income tax liability. When businesses consider financial transactions, they must account for all potential tax implications that may arise and plan accordingly. This includes considering any governmental regulations, rules and laws related to taxation, as well as state and local taxes. Business owners must pay attention to these complexities in order to limit the amount of taxes they owe and stay compliant with regulations. In short, tax implications are the regulatory effects that a business must keep in mind when making financial decisions.