The $10,000 SALT Cap Problem
The 2017 Tax Cuts and Jobs Act (TCJA) introduced a $10,000 limit on the federal deduction for state and local taxes (SALT). This section visualizes how the cap disproportionately affects taxpayers in high-tax states. Hover over the bars to see the significant gap between taxes paid and what can be deducted.
The PTET Workaround Explained
In response to the SALT cap, states developed the Pass-Through Entity Tax (PTET). This strategy shifts the state tax payment from the individual to the business, transforming a limited personal deduction into a fully deductible business expense. Click below to see how it works.
State-by-State PTET Explorer
As of 2025, 36 states have adopted a PTET, but the rules vary dramatically. Select a state to view its specific regime details or compare tax rates across all PTET states in the chart below. This tool helps you quickly understand the landscape in jurisdictions relevant to you.
Strategic Analysis & Benefit Estimator
Is the PTET election right for your business? It's a complex trade-off. Below, we outline the pros and cons and provide an interactive estimator to model the potential financial impact for a simplified scenario. This is for illustrative purposes only.
PTET Benefit Estimator
Pros vs. Cons
Pros
- Bypasses $10k individual SALT cap.
- Reduces owner's Adjusted Gross Income (AGI).
- Can unlock other AGI-limited deductions.
- May simplify non-resident state filings.
Cons
- Risk of double taxation for non-residents.
- Reduces the federal QBI deduction.
- State "leakage" (credit < 100% of tax paid).
- Adds administrative complexity and cost.
- Inequities for S-Corp shareholders.
The 2026 Crossroads: Future Scenarios
The SALT cap and other TCJA provisions expire after 2025, creating significant uncertainty. Congress is debating the path forward. Use the buttons below to compare the three most likely scenarios and see how they would alter the tax landscape for individuals and businesses.
Select a Scenario to See Details
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