Electing Pass-Through Entity Owner Tax Credit (SALT Parity)
CO-SALT-PTE · Colorado
Summary
Federal SALT-cap workaround. Pass-through entities (partnerships, S-corps, LLCs taxed as PTEs) may make an annual irrevocable election to be taxed at the ENTITY level on owners' distributive share of Colorado-source (and, for resident owners, full distributive share) income. The entity pays Colorado income tax at the state's individual rate (currently 4.40%) on the qualifying base; each owner then receives a refundable Colorado income tax credit equal to their distributive/pro-rata share of the entity-level tax paid. Net effect: federal SALT deduction is preserved (entity-level tax is fully deductible at federal level, bypassing the $10K SALT cap on personal returns), and Colorado net liability is roughly equivalent. Election is retroactive to 2018 (made on amended returns) and continues annually thereafter, available on prospective returns through current tax years.
Benefit
- Percentage
- 100% of tax_liability
- Flat
- —
- Duration
- —
- Max annual
- — (taxpayer)
- Max total
- — (taxpayer)
- Carryforward
- —
Program metadata
- Distribution
- taxpayer_earned
- Claimant subject
- pass_through_member
- Refund/transfer election
- refundable_only
- Program family
- —
- Effective
- —
- Sunset
- —
- Application deadline
- —
- Transfer discount
- —
Hard requirements (1)
- industry_keywordEligibility flows from pass-through entity status: partnerships, S-corporations, and LLCs taxed as partnerships/S-corps. Sole proprietorships and disregarded single-member LLCs do NOT qualify (no entity-level election available). C-corporations also do NOT qualify (already pay entity-level tax under the C-corp regime).
Preference / tiering rules (0)
None.
NAICS industries (0)
Any.
Geo zones (1)
- statewide — · Colorado Statewide (CO-source income at entity level)
Tags (6)
- entity_level_tax_rate_pct: 4.40
- retroactive_to_year: 2018
- election_annual_irrevocable: true
- entity_form: DR_0106
- owner_credit_schedule_k1: DR_0106K
- individual_credit_schedule: DR_0104CR