SALT Cap Here to Stay

April 2022

BY

Scott SmithManaging Director, National State and Local Tax Services Practice Leader

Kent DeBruinSenior Manager, National State and Local Tax Services

On April 18, 2022, the U.S. Supreme Court denied the petition for writ certiorari brought by four states -- Connecticut, Maryland, New Jersey and New York -- challenging the $10,000 state and local tax deduction cap enacted under the Tax Cuts and Jobs Act (SALT cap). As such, the October 2021 Second Circuit decision that the SALT cap does not unconstitutionally infringe on state sovereignty stands.

This likely is the end of state constitutional challenges to the SALT cap. Meanwhile, many states have enacted or will enact elective pass-through entity tax workarounds to mitigate the SALT deduction cap’s impact on partners and shareholders of closely-held businesses.

BDO SALT professionals can assist PTEs to determine the mechanics of state PTE tax elections and the potential benefits and costs, and to model the overall federal and state tax impact to the PTE and its members.

For more information, contact BDO.