AB 150 $10,000 SALT Workaround
California recently passed AB 150 which offers a workaround for the $10,000 federal cap on individual's deductions for state and local taxes. This new law is an elective entity level tax available to qualifying pass-through entities. An eligible entity that elects in to the tax will pay a 9.3% tax on its taxable income and the pass-through owners then receive a tax credit to be applied to their personal California income tax. For federal income tax purposes, the entity level tax reduces the pass-through’s net income, which in turn reduces the net income of the pass-through owners on their federal income tax returns.
This could make a big impact for certain taxpayers. The FTB is still working out all the details but please contact our office after October 15th if you are interested in taking advantage of this new option.