BDO USA has published an article, “Massachusetts Enacts Elective Pass-Through Entity Tax”, published on BDO USA. The abstract is as follows:
On September 30, 2021, the Massachusetts legislature overrode Governor Charlie Baker’s veto of H.B. 4009, thereby enacting an entity-level pass-through entity (PTE) tax. The legislation mitigates the impacts of the federal $10,000 cap on state and local tax (SALT) deductions by creating a partial credit for members of electing PTEs on their share of state income tax. For tax years beginning on or after January 1, 2021, the new law allows eligible PTEs to pay an elective excise tax on qualified income taxable in Massachusetts. Eligible PTEs are S corporations, partnerships and LLCs treated as S corporations or partnerships. The tax rate for all electing PTEs is 5%.
Posted by Bennett Mansour, Associate Editor, Wealth Strategies Journal.