THE RISKS, REQUIREMENTS, AND SAVINGS OPPORTUNITIES
Did you know that each state PTE tax involves different eligibility requirements, election due dates, filing deadlines, and effective dates?
IT'S ALL IN THE DETAILS
Click on your state below, and review your state's specific information, to see if you can take advantage of the State Pass-Through Entity Cap Workaround.
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AL
CA
OR
AZ
CO
CT
GA
ID
IL
LA
MD
MA
MN
NJ
NY
OK
RI
SC
WI
PA
NC
AR
MI
EFFECTIVE DATE
Jan. 1, 2021
ELECTION DUE DATE
The 15th day of the third month following the close of the electing tax year. For the 2021 year the due date is Mar. 15, 2022.
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CALIFORNIA
California’s Gov. Gavin Newsom recently signed Assembly Bill 150 (“AB150”), which created a workaround for the current $10,000 limitation on the deduction for state and local taxes paid for individuals established by the Tax Cuts and Jobs Act (TCJA). AB150 creates an elective tax that allows the taxes on pass-through income to be paid at the entity level. This means owners will be able to bypass the cap’s limitation that could otherwise be applicable.
EFFECTIVE DATE
Jan. 1, 2021
ELECTION DUE DATE
Pending. Election required on timely filed tax return for 2021 without extensions.
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EFFECTIVE DATE
Jan. 1, 2022
ELECTION DUE DATE
Election required on or before the return due date with regard to any extensions.
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EFFECTIVE DATE
Dec. 31, 2021
ELECTION DUE DATE
On or before the due date or extended due date of the entity's tax return for the election year.
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EFFECTIVE DATE
Jan. 1, 2022
ELECTION DUE DATE
Apr. 15 (pending)
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EFFECTIVE DATE
Jan. 1, 2018
ELECTION DUE DATE
No election – mandatory
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EFFECTIVE DATE
Jan. 1, 2022
ELECTION DUE DATE
Election to be made on an annual basis with the filing of the return on or before Mar. 15 for calendar year-end PTEs (or Sept. 15 in the case of returns filed under extension).
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EFFECTIVE DATE
Jan. 1, 2021
ELECTION DUE DATE
Apr. 15 of applicable year
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EFFECTIVE DATE
Jan. 1, 2021
ELECTION DUE DATE
Election required
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EFFECTIVE DATE
Jan. 1, 2019
ELECTION DUE DATE
On or before Apr. 15, 2021.
For fiscal year taxpayers, on or before the fifteenth day of the fourth month of the effective fiscal year.
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MARYLAND
EFFECTIVE DATE
Jan. 1, 2020
ELECTION DUE DATE
Apr. 15, 2022 (Election made with filing Form 511 PTE Income Tax Return)
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EFFECTIVE DATE
Jan. 1, 2021
ELECTION DUE DATE
Mar. 15
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EFFECTIVE DATE
Jan. 1, 2021
ELECTION DUE DATE
Mar. 15, 2021, or extended due date of return if extended
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NEW JERSEY
EFFECTIVE DATE
Jan. 1, 2020
ELECTION DUE DATE
Annually on or before the original due date of return.
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NEW YORK
EFFECTIVE DATE
Jan. 1, 2021
ELECTION DUE DATE
Oct. 15, 2021 and 2022.
And beyond: Mar. 15, 2021
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EFFECTIVE DATE
Jan. 1, 2019
ELECTION DUE DATE
Anytime during the prior tax year or 2 months and 15 days after the beginning of the year.
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EFFECTIVE DATE
Jan. 1, 2019
ELECTION DUE DATE
Mar. 15, 2021, and the fifteenth day of the third month for fiscal year filers.
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EFFECTIVE DATE
Jan. 1, 2020
ELECTION DUE DATE
Annually by the filing due date of the income tax return (including extension).
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EFFECTIVE DATE
Jan. 1, 2019
ELECTION DUE DATE
Annually on or before the due date or extended due date of its return.
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EFFECTIVE DATE
Pending
ELECTION DUE DATE
Pending
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EFFECTIVE DATE
Jan. 1, 2022
ELECTION DUE DATE
Pending
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EFFECTIVE DATE
Jan. 1, 2022
ELECTION DUE DATE
Election to be made on an annual basis before the business entity's original due date (Apr. 15 for calendar year filers) or extended due date (Oct. 15 for calendar year filers).
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EFFECTIVE DATE
Jan. 1, 2021, pending passed by the House only
ELECTION DUE DATE
Pending for 2021: The fifteenth day of the fourth month of the year
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RISKS
Since the pass-through entity tax is an elective tax in most states, the need for conversations around the pros and cons of making an election lies squarely on the shoulders of the members of each pass-through entity.
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COMPLEXITIES
Though there could be significant tax savings for members, pass-through entities, especially those with complex structures and significant tax filings in multiple states, should evaluate with both their members and trusted tax advisors whether making an election is beneficial.
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