The Pennsylvania House Finance Committee has scheduled a vote for June 7 on House Bill 1709 that allows an elective pass-through entity tax (PTE tax). The bill outlines an elective PTE tax that would provide a federal tax benefit which clarifies the statutory language under which the Department of Revenue (DOR) that currently penalizes Pennsylvania resident partners who elect to pay PTE taxes in other states.

The federal Tax Cuts and Jobs Act of 2017 (TCJA) changed the Internal Revenue Code state and local tax deduction limitation (SALT cap) to $10,000. The SALT cap prevents many individuals from being able to fully deduct state and local income tax and property tax on their federal individual income tax returns. This cap severely limited the state and local expense deduction for taxpayers with multistate ownership interests in pass-through entities as partnerships, S corporations, and certain limited liability companies.

Maria Stromple, CPA, MST

 

Maria is a Partner at Wilke & Associates, serving closely held businesses in manufacturing, real estate, transportation/logistics, technology industries, and high net worth individuals and executives in delivering effective tax strategies.