Kentucky could soon enact a pass-through entity tax workaround to the $10,000 federal state and local tax deduction cap under a bill heading to the desk of Democratic Gov. Andy Beshear.
The provision is part of a larger bill (H.B. 360) and would allow partnerships and other pass-through businesses to pay Kentucky income tax at the entity level, instead of having their income passed through to individual owners for taxation. The individuals would get a state tax credit for the amount paid, thus easing the impact of the $10,000 federal limit on deductions for state and local taxes.