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I hope the states keep the ability to have PTEs pay and deduct taxes for individuals, even if the SALT limit is repealed by the feds. It helps those who take the standard deduction a lot.

That exempt income should increase basis

If I was preparing this return, the only place I would enter it is on Line 6 Schedule M-1.

Here's a link to a 10-page New York-centric FAQ I've found most illuminating -- and includes remarks about Connecticut, New Jersey and Pennsylvania residencts: https://s3-us-west-1.amazonaws.com/groupsioattachments/45544/85380483/359553/0?AWSAccessKeyId=AKIAJECNKOVMCCU3ATNQ&Expires=1630956802&Signature=Z6meD91kXv%2BsPHjRoSKlqqbg0ow%3D&response-content-disposition=inline%3B+filename%3D"New+York+State+Pass-through+Entity+Tax+-+FAQs+-+August+2021.pdf"

Thanks, Elrod, for always keeping us in a good mood, sharing laughter!

Here is an in depth analysis of all the states ( almost 20 states now ) that have passed a PTE Tax: https://www.bdo.com/insights/tax/state-and-local-tax/five-more-states-enact-pte-tax-elections#:~:text=On July 19%2C 2021%2C Oregon enacted S.B.&text=An eligible PTE%2C which is,through business alternative income tax.”

Copied from Accounting Today: "Following enactment of the state and local tax deduction limitation in the Tax Cuts and Jobs Act in 2017, many states began looking for structures to circumvent the limit. These included trying to shift to a deductible charitable contribution, shifting to a payroll tax, and shifting to an entity-level tax. The Internal Revenue Service took a dim view of the charitable contribution approach, and the payroll tax approach appeared to be too complicated to implement. However, the entity-level tax has been blessed by the IRS, leading to a stampede among states to implement that approach. Notice 2020-75, issued Nov. 9, 2020, states that the IRS intends to issue proposed regulations clarifying that state and local income taxes imposed on and paid by a partnership or an S corporation are allowed as a deduction by that entity in computing its taxable income or loss in the year of payment. The notice also clarifies that the rule applies in a tax year ending after Dec. 31, 2017, covering the period back to implementation of the state and local tax deduction limit."

The key difference is that the CT PTE Tax is mandatory, while I believe the other state's PTE Taxes are voluntary.

Here's a link to a good summary of NY's PTET from Deloitte. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/Tax/us-tax-mta-overview-of-new-yorks-new-pass-through-entity-tax.pdf

Yes, there are at least 16 states that have passed a PTE Tax law now. It is a SALT workaround that actually does work. but only for S Corp owners and PTS partners.