State and Local Tax (SALT)

Nexus, apportionment, and pass-through entity tax concepts for multistate income tax.

Key sections and concepts

Section 164

State and local tax deduction

Sets the federal deduction for taxes paid, including the SALT cap.

P.L. 86-272

Interstate income tax protection

Limits state income tax on sellers of tangible goods whose in-state activity is solicitation.

Apportionment

Dividing income among states

Allocates a multistate business's income, often on a single sales factor.

Market-based sourcing

Sourcing receipts from services

Assigns service receipts to where the benefit is received.

PTET

Pass-through entity tax

Allows an elective state tax paid at the entity level.

Conformity

State conformity

Determines how each state follows the Internal Revenue Code.

Combined reporting

Unitary filing

Requires related unitary businesses to file a combined report in some states.

Domicile

State residency

Determines where an individual is taxed as a resident.

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For general education only, not tax advice. Tax law changes often, so confirm current rules and amounts with primary sources.