Under Maryland Senate Bill 523, which was enacted into law earlier this month without Gov. Larry Hogan’s signature, pass-through entities will be able to tax advantage of a higher State and Local Tax deduction, which had been capped at $10,000 under the federal tax reform bill passed in 2017.
SB 523 will allow pass-through entities (defined for this purpose to include, at minimum, S-corps, LLCs, partnerships, and business trusts) to pay income taxes directly at the entity level and then afford their members and partners the chance to claim a state tax credit against those taxes. This option is an elective one, not mandatory.
There may be reasons why a partner or outright owner of a pass-through entity may not wish to claim this new workaround. The provision will take effect beginning with this current tax year, and WANADA encourages you to speak with your CPA or financial advisor to determine if this credit is right for you or your business.Download Bulletin PDF