Pass-Through Entities: A New Tax Break for Ohio Business Owners
On June 14, 2022, Ohio passed a law to help pass-through entity (“PTE”) owners deduct state taxes. The new law will provide PTE owners with a state “work-around” tax that is not intended to be subject to the $10,000 cap on the federal income tax deduction for state and local taxes (SALT Cap). Ohio has now joined 28 other states in passing laws to allow a pass-through entity to elect to be taxed at the entity level.
Below, we have included the key highlights of this new law.
Estimates of the tax are required but for 2022 the Q1 and Q2 deadlines have already passed. Some sort of penalty relief is likely, but it is still unclear. We expect more guidance and details to be released from the Ohio Department of Taxation on this new tax, particularly relating to how income adjustments and refundable credits will flow up to indirect owners of an electing PTE.
BMF Advisors can assist PTEs and their owners subject to Ohio taxation planning for these changes and the necessary procedures for making PTE tax elections under Ohio’s new law.
Melissa G. Dunham?>
CPA, MTax, MBA
Michael A. Hydell?>
About the Authors
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