Two New York state lawmakers from the Hudson Valley have introduced legislation for a state and local tax workaround for partnerships. The hope is to counter what they call the negative impact of a state and local tax deduction cap under federal tax legislation signed three years ago.
Assembymember Amy Paulin and Senator James Skoufis introduced legislation to allow New York State partnerships and other pass-through businesses to pay a tax to New York, for which they get a full federal deduction, with the tax payments offsetting the partners’ New York State income tax. This would allow partners to take the full SALT deduction, which would be limited to $10,000 if the partners paid their income taxes directly to New York State. There would be no impact to state revenue. New Jersey and Connecticut have enacted similar laws. And the Democrats say the IRS issued guidance on November 9 authorizing this arrangement.
