WASHINGTON — Business owners are saving more than $10 billion annually in federal taxes through state laws, bypassing the $10,000 limit on state and local tax deductions, according to a Wall Street Journal analysis of state data. We do.
State laws blunt the cap’s effect on owners of close businesses such as law firms, hedge funds, manufacturers and car dealerships, while wage-earning workers typically cannot take advantage. The strategy, now available in 27 states, converts business owners’ personal income taxes into deductible business taxes known as the SALT cap on state and local tax deductions.