SALT Cap Workaround Retroactive to 2018 Advances in Colorado

Colorado could be flooded with tens of thousands of amended tax returns under fast-moving legislation that would make the state’s workaround to the federal $10,000 cap on deductions for state and local taxes retroactive to 2018.

The Senate on Wednesday unanimously passed the SALT Parity Act, S.B. 22-124, which modifies a previous law permitting pass-through businesses such as partnerships and S corporations to pay their state income taxes at the entity level as a workaround to the $10,000 cap in the 2017 federal tax law. Colorado’s original law was effective for tax years beginning Jan. 1, 2022, but S.B. ...