California Adds To List Of States Allowing State And Local Tax Cap Workaround

California now allows a workaround on the $10,000 limitation on the deduction of state and local taxes of certain taxpayers.

The workaround applies to qualifying limited liability companies, partnerships and “S” corporations.

The qualifying entity can elect annually to pay a 9.3 percent tax of its qualified net income to California and the consenting owner(s) of the entity will receive a credit equal to the tax paid by the entity on such owner’s behalf.

Further guidance is expected from the California Franchise Tax Board. Visit ftb.ca.gov/about-ftb/newsroom for updates.