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New Law Tax Workaround for CA Pass-Through Business Owners

Richard A. Huffman, CPA, MST Tax Partner   The 2017 Tax Cut and Jobs Act limits individuals state and local tax deduction to $10,000 a year through 2025. California passed into law a workaround for tax years 2021- 2025. Qualifying pass-through business owners can separately elect to pay a 9.3% entity level tax on the owner’s share of the company’s qualified taxable income which will be allowed as a federal tax deduction on the entity return. Owners who participate will receive a credit on their California individual tax return equal to the 9.3% tax paid at the entity level.  The
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