Alabama
Beginning in tax year 2024, pass-through entities may make or revoke their election to be taxed at the entity level up until the due date for filing the applicable income tax return, including any extensions. The previous deadline was the 15th day of the third month following the close of the tax year.
Also, beginning in tax year 2025, the election or revocation will be made on the entity’s tax return instead of a separate form.
Colorado
It’s been a busy month for the Colorado Department of Revenue, with new rules applying to:
Family and Medical Leave Insurance (FAMLI)
FAMLI benefits can be subtracted from federal taxable income for taxable years beginning on and after January 1, 2024.
State Income Tax Addback
For Colorado income tax purposes, each individual, estate, or trust must add any state income tax deducted in determining their federal taxable income. This rule also applies to any FAMLI premiums withheld from an individual’s wages and deducted by that individual as state income taxes in computing the individual’s federal taxable income.
Itemized Deduction Limitation: Itemized deductions are limited to the amount required to reduce the federal itemized amount of the federal standard deduction.
Partners: Each partner must add to federal taxable income their share of any state income tax deducted by the partnership for the tax year, regardless of the state to which the income tax was paid or accrued. The amount the partner must add is the partner's distributive share of the deduction claimed by the partnership, determined in accordance with the partner's distributive share, for federal income tax purposes, of partnership taxable income, or general loss.
S corporation shareholders: Each nonresident shareholder of an S corporation must add to federal taxable income their pro rata share of any Colorado income tax deducted by the S corporation for the tax year. Each resident shareholder of an S corporation must add to federal taxable income their pro rata share of any state income tax deducted by the S corporation for the tax year, regardless of the state to which the income tax was paid or accrued.
Itemized Deductions Addback
A taxpayer whose adjusted gross income is equal to or exceeds the Colorado itemized deduction cap, and whose itemized deductions exceed the statutory limits, is required to add back the difference between their claimed itemized deduction and the applicable limit on their Colorado income tax return to determine their Colorado taxable income.
For purposes of this rule and the itemized deduction cap, a taxpayer who files married filing separately or head of household on their federal income tax returns is considered a single filer.
A required addition for itemized deductions is reduced by: (1) any addback for state income taxes deducted by the individual as part of the itemized deductions on their federal return, but not for a share of state income tax deducted by a partnership or S corporation; and (2) any addback for a charitable contribution deduction for real property for a conservation purpose.
Georgia
Income Tax Rates
Effective July 1, 2024 but applicable to all taxable years on or after January 1, 2024, the corporate and individual income tax rates for tax year 2024 are reduced to 5.39%. Previously, the corporate tax rate was 5.75% and the individual tax rate was 5.49%.
Property Tax Reform
Governor Kemp has signed legislation that makes changes to the tax notice and appeal process and proposes a constitutional amendment for counties to provide a statewide homestead valuation exemption. The law provides for a special local option sales tax not to exceed 2% for counties and municipalities to provide for property tax relief.
Idaho
Effective January 1, 2024, both the corporate and personal income tax rates in Idaho have been reduced from 5.8% to 5.695%.
Michigan
The state’s flow-through entity tax (FTE) rate for 2024 is 4.25%. The 2023 FTE rate was 4.05%. This change should not affect members of calendar year flow-through entities. However, members of 2023-24 fiscal year electing flow-through entities that claim a credit on their 2024 Michigan individual income tax return may be underpaid and should evaluate whether estimated payments may need to be adjusted.
West Virginia
Effective January 1, 2024, all West Virginia personal income taxpayers will be able to reduce state taxable income by 35% of the amount of Social Security benefits received that are included in federal Adjusted Growth Income (AGI). This subtraction increases to 65% for taxable years beginning on or after January 1, 2025, and to 100% for taxable years beginning on or after January 1, 2026.
Previously, the subtraction for Social Security benefits was limited to married taxpayers filing jointly with federal AGI up to $100,000 and taxpayers who were single/married filing separately with federal AGI up to $50,000.
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