Bloomberg Tax
Jan. 14, 2021, 8:59 PM

California Lawmakers, Governor Float SALT Cap Workaround Plans

Laura Mahoney
Laura Mahoney
Staff Correspondent

California lawmakers and Gov. Gavin Newsom (D) are proposing different ways to reach the same goal: help residents get around the federal $10,000 cap on deductions for state and local taxes.

Both proposals stem from Internal Revenue Service approval in November of tax mechanisms already in place in seven states—and being considered in several more—that use an entity-level tax on owners of pass-through businesses to avoid the SALT deduction cap in place since 2017. The businesses can pay the tax in exchange for reducing state income tax liabilities for their members.

A new California Senate ...

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