Pass-through entity (PTE) elective tax

For taxable years beginning on or after January 1, 2021, qualifying pass-through entities (partnerships and S corporations) may annually elect to pay an entity level state tax on income. Qualified taxpayers receive a credit for their share of the entity level tax, reducing their California personal income tax. The elective tax is 9.3% of the entity’s qualified net income and must be paid on or before the due date of the original tax return.

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