We are thrilled to announce that Governor Murphy has signed the pass-through entity bill!
On Jan. 13, Governor Murphy signed the Pass-Through Business Alternative Income Tax Act into law. This act allows pass-through businesses to pay income taxes at the entity level instead of the personal level. This helps business owners mitigate the negative impact of the federal SALT deduction cap. It’s estimated to save New Jersey business owners $200 to $400 million annually. And it won’t cost New Jersey a dime because it’s revenue neutral for the state.
Under the act, taxpayers who earn income from pass-through businesses and pay the pass-through business alternative income tax can obtain a refundable gross income tax credit. There is no limit on the deduction of state taxes paid at the entity level under the federal Tax Cuts and Jobs Act (TCJA), only at the individual income level. Currently, pass-through business owners can only deduct up to $10,000 in state and local taxes on their personal income taxes.
The act took effect Jan. 1, 2020. Please contact us with any questions and to discuss the impact on your pass-through entity and your personal tax liabilities.
Contact our Firm
Werdann DeVito LLC is an experienced Certified Public Accountant firm serving clients throughout New Jersey with all of their financial needs. If you need quality assistance with accounting, tax, or consulting services, contact Werdann DeVito LLC today.