What is a pass-through entity (PTE) tax election and can it save me SALT money?

Most states now offer a pass-through entity tax that lets partnerships and S-corporations pay state income tax at the business level, where it's fully deductible on the federal return, instead of passing it to owners who face the SALT cap on their personal returns ($40,400 in 2026, reverting to $10,000 from 2030). The owners then get a credit or income exclusion on their state return, so it's largely a mechanism to convert non-deductible personal SALT into deductible business expense. It can save high earners in high-tax states thousands of dollars a year. The rules, election deadlines, and mechanics differ by state, and there can be quirks for owners who live in a different state than the business. If you own a share of a pass-through, ask your accountant whether the PTE election makes sense before the annual election deadline.