A growing number of states are pushing the pass-through entity tax further into the architecture of state and local tax planning. The tax, known as PTET, is a workaround for the federal cap on state and local tax deductions. But practitioners and taxpayers should be clear about what’s being created.
Maine and Washington have new PTET regimes. Illinois, Utah, and Virginia made their programs permanent. California, Minnesota, and Oregon extended their existing programs. Pennsylvania remains the largest holdout, but its position now looks more like an exception than a competing model.
This is the central feature of the current PTET landscape: The map is more settled, but the rules remain state-specific.
