Pass-Through Businesses OK to Deduct SALT, Cap-Free, IRS Says

Owners of partnerships and S corporations are allowed to deduct state and local income taxes from their taxable income in full, the Treasury Department and the IRS signaled Monday.

The IRS said in Notice 2020-75 that it will propose rules allowing pass-through business entities that pay income taxes, instead of having their owners pay the tax on an individual level, to deduct the whole amount. The amount isn’t limited by the 2017 tax law’s $10,000 cap on individuals’ SALT deductions.

• The rules will apply starting on the date of their release, Monday, the agencies said, and will be able to ...