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California PTET calculator
The $10,000 SALT cap is silently eliminating most California business owners’ state tax deduction. The Pass-Through Entity Tax election moves that deduction to the entity level — no cap, full federal savings. This tool shows you exactly how much you’re leaving on the table.
Educational estimate — not tax advice. Confirm the election and payment mechanics with your CPA.
Why PTET matters for California S-corp owners
The 2017 Tax Cuts and Jobs Act capped the federal deduction for state and local taxes at $10,000. For California business owners with property taxes, W-2 income, and business income, that cap is routinely exceeded. California’s AB 150 (2021) created a legal workaround.
The problem: SALT cap
California income tax rates go up to 13.3%. A business owner with $200k of S-corp income owes $18,600 in CA income tax — but can only deduct $10k of combined state and local taxes federally. Most of that CA tax simply disappears.
The solution: entity-level payment
PTET shifts the CA income tax payment from the owner's personal return to the entity's books. Business expenses aren't subject to the SALT cap — they're fully deductible. Same dollars, different line on the return.
The credit makes it a wash for CA
To prevent double taxation, California gives the owner a personal credit equal to the PTET paid. You don't pay CA twice. You're simply rerouting the CA payment to get the federal deduction.
The credit is refundable
For tax years beginning on or after January 1, 2022, the California PTET credit is refundable. If the credit exceeds your personal CA tax liability, you get the difference back — you're not leaving any credit on the table.
It has to happen before June 15
The entity must prepay the PTET to the FTB by June 15 of the tax year to get the full current-year deduction. Under SB 132 (2026), missing the deadline no longer disqualifies the election — the California credit is reduced by 12.5% of any shortfall. Your CPA needs to flag this in Q1.
The election is annual
You elect PTET each tax year — it's not permanent. This is actually useful: if your income or deductions change, you can re-evaluate whether to elect each year.
PTET in the context of your full tax picture
PTET is one piece of proactive CA tax planning. The full picture for an S-corp owner includes:
PTET Election
Recover the SALT cap loss on CA income taxes.
OpenS-Corp Salary
Right-size your W-2 to maximize SE tax savings without triggering audit risk.
OpenQBI Deduction
The 20% pass-through deduction — and how your salary affects it.
OpenRetirement Contributions
Maximize Solo 401(k) contributions to lower taxable income before year-end.
OpenWork with us
PTET is a one-conversation fix.
If your CPA hasn’t brought up the PTET election, it may simply not be on their radar. A 30-minute review of your S-corp structure, salary, and PTET eligibility is typically where the biggest savings live.
Talk with MattMonthly tax planning reminders
One email per month — what’s due, what to do, and which tool to use. No fluff.