The Tax Cuts and Jobs Act of 2017 essentially eliminated the deductibility of state income taxes above the $10,000 level.
However, many states got creative and enacted the ability for pass-through entities to pay the state income tax on behalf of the taxpayer and deduct those taxes on that entity’s tax return. This in effect, allowed for a full deduction of the state income tax. The is commonly referred to as a pass-through entity (PTE) tax payment.
