The main benefit of the SALT Parity Act would be that state income taxes on the business income would be fully deductible, as opposed to potentially being partially or non-deductible on your personal tax return. Under current tax law in 2023, individuals cannot deduct more that $10,000 of state and local income taxes on their federal personal tax return, and must itemize their deductions to do so. So, if you have more that $10,000 in state taxes or you don't itemize your deductions on your personal tax return, you do not get a deduction for all or any of the state income taxes that you pay. If you adopt the SALT Parity Act election for your business entity, you will be able to deduct the full amount of state income taxes, as it will be deducted on the business tax return, so your share of business earnings will be after the state taxes have been deducted.
So, adoption of the Parity Act would be most beneficial where the owners are limited in their ability to deduct state income taxes on their personal tax return.
You can learn more here: SALT Parity Act
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