The $10,000 SALT deduction cap hits Bay Area business owners hard, but pass-through entity elections and strategic planning can recover tens of thousands in annual tax savings. To learn more, visit: https://www.vikprocpa.com/
Picture this: you run a successful business in the Bay Area. You're doing everything right. Revenue is growing, you're hiring, and then April rolls around. Your accountant tells you that despite paying over $50,000 in California state taxes, you can only deduct $10,000 of it on your federal return. The rest? It just disappears into thin air. That's the SALT cap, and if you haven't heard about it, you're not alone—but it's probably costing you a fortune. The state and local tax deduction cap became law back in 2018, and it's been quietly draining money from business owners ever since. California has some of the highest state tax rates in the country, so when you're limited to a $10,000 deduction, the rest of what you paid essentially becomes worthless on your federal return. For someone paying $40,000 or $50,000 in state taxes, that's a massive hit. But here's the thing most business owners don't realize: there are legal workarounds. The California Pass-Through Entity election is one of the most powerful tools available right now. If you operate as an S-corporation or partnership, you can shift where you pay your state taxes. Instead of paying them on your personal return where the cap applies, your business pays them at the entity level. That payment becomes fully deductible as a business expense, no cap, no limits. The math is simple. Let's say you owe $60,000 in California state tax. Under the old way, you deduct $10,000 and lose the benefit on the other $50,000. With the PTE election, your business deducts the full $60,000. At the top federal tax rate, that's a savings of around $18,500. Every single year. That's real money staying in your business instead of going to the IRS. Now, this strategy isn't automatic. You have to file an election by March 15th each year. You need to make estimated payments on a specific schedule. And you have to make sure your business structure actually qualifies. Not every entity can use this approach, and there are ownership rules that can complicate things. That's where working with Bay Area tax professionals makes all the difference. Vik Randhawa CPA has helped dozens of local business owners navigate the PTE election, calculate their savings, and handle all the filing requirements. The firm's flat-fee structure means you know exactly what you're paying upfront, and their team breaks down complex tax rules into language that actually makes sense. If you're a Bay Area business owner paying significant California state taxes, don't leave money on the table. Check out the link in the description to connect with Vik Randhawa CPA and see how much you could be saving. VIk Randhawa, CPA City: Newark Address: 35111 Newark Boulevard Website: https://www.vikprocpa.com/ Phone: +1 510 258 4495 Email: Info@vikprocpa.com