Reducing your New Jersey tax liability with BAIT

New Jersey joined the SALT (State and Local Tax) deduction cap workaround bandwagon last year by establishing its Business Alternative Income Tax (BAIT).

The BAIT is an elective business tax regime in which New Jersey pass-through entities (PTEs) — partnerships, LLCs and S corporations — can elect to pay an entity-level tax. The BAIT is fully deductible for federal tax purposes and, as an added benefit, the PTE partners’ are entitled to a state credit for their share of the tax paid.

For New Jersey residents, electing the BAIT can be an especially viable workaround to the federal SALT limitation.

For more information on Business Alternative Income Tax (BAIT), please view this  Anchin Alert here.

– Alan Goldenberg and Teresa Pratt, Anchin