Close-Up on Pass-Through Entity Tax Laws
At the start of 2024, three dozen states and New York City already had pass-through entity taxes (PTETs) on their books, with legislation pending in three other states. These types of workarounds for the current $10,000 cap on the federal deduction for state and local taxes (SALT) have become more prevalent. But they aren't necessarily the right option for every pass-through entity, partner or shareholder. Businesses and their individual owners must consider the pros and cons before electing this tax treatment.