Newsom Signs SALT Cap Workaround for Partnerships, S Corps, LLCs

California Gov. Gavin Newsom signed a bill Friday creating a workaround of the $10,000 federal cap on individuals’ deductions for state and local taxes, available to S corporations, partnerships, and limited liability companies.

Although the Democratic governor originally sought to limit the workaround to S corporations, his administration and lawmakers expanded the option to other types of pass-through businesses during final negotiations on the measure (A.B. 150). It is part of the overall budget package for the fiscal year that began July 1.

• The pass-throughs can elect to pay a 9.3% income tax as long as ...