In response to the Tax Cuts and Jobs Act of 2017 (TCJA 2017), which limits the federal income tax deduction for state and local tax payments to $10,000 per year (and limits some other itemized deductions), the Mississippi legislature passed House Bill 1691 into law effective for tax returns due after January 1, 2023. Subsequently, the legislation just passed House Bill 1668, which corrected several drafting errors in the original bill. It allows for any partnership, S corporation or similar pass-through entity (PTE) to elect to be taxed at the entity level, rather than at the individual level, for state income tax purposes. This means that PTE’s are now able to fully deduct state income taxes paid in a given tax year, unlike individuals.

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