When to do PTET

The increase of the SALT limit might lead to you not electing PTET

Photo by caroline gunderson on Unsplash

The One Big Beautiful Bill increased the State and Local Tax (SALT) limit from $10,000 to $40,000. However, as your Adjusted Gross Income (AGI) increases from $500,000 to $600,000 the extra $30,000 limit is phased down to $10,000.

Many farmers operate as an S corporation or partnership and may elect to have the entity pay the state income tax at the entity level. This is commonly referred to at the PTET election. This allows the entity to get a full deduction for SALT and still allow the individual to deduct up to $40,000 (for 2025-2029). Under the old rules, this was very beneficial for these farmers. But what about the new rules.