Bloomberg Tax
March 17, 2023, 8:23 PM

Kentucky Bill With SALT Cap Workaround Cleared for Governor

Donna Borak
Donna Borak
Senior Reporter

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.

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