When the Tax Cuts and Jobs Act (TCJA) of 2017 passed, one of the most controversial provisions was the $10,000 limit on the amount of deductible state and local taxes (SALT). This provision has become known as the SALT cap.
To help business owners mitigate the tax deduction limitation, states began introducing an optional pass-through entity tax (PTET) to be imposed at the entity level. Electing into the PTET allows state income taxes to be deducted on individuals’ Federal income tax returns as an ordinary business expense and avoid SALT cap limits.
Learning Objectives:
- Learn the history of SALT caps and PTE taxes
- Understand which states have PTET elections available
- Determine if your business could qualify for PTET elections
