Posts tagged State and Local Tax Cap Workaround.
The Tax Cuts and Jobs Act of 2017 (TCJA) imposed a $10,000 cap on the federal deduction for state and local taxes for tax years 2018-2025. While corporations are not subject to the cap, business owners who pay state and local income tax on pass-through income are subject to the cap.
On November 9, 2019 the IRS released Notice 2020-75 indicating it would issue regulations to clarify that state and local taxes paid by a partnership or corporation would be deductible by the partnership or S corporation when they compute their pass-through income. This guidance paves the way for states to enact ...