The Oregon Department of Revenue provided specific guidance directed towards taxpayers that meet the inclusion criteria for more than one unitary group for purposes of the Commercial Activity Tax (CAT). S.B.139 also clarifies the types of pass-through entities whose income is eligible for this election and imposes additional eligibility requirements.Ĭorporate Activity Tax for Unitary Groups 139 modifies the tax brackets for income exceeding $500,000 but not exceeding $1,000,000. However, this reduced rate is only imposed on the pass-through income exceeding $250,000 but not exceeding $500,000. 139 lowered the elective reduced personal income tax rate allowed for certain-pass through income to 7 percent (from 7.2 percent) for tax years beginning on or after January 1, 2021. Reduced Income Limits Eligible for Elective Reduced Personal Tax RateĪlso signed in July of 2021, S.B. The election shall be made annually on or before the due date, including extensions, of the pass-through entity’s return, in the form and manner prescribed by the Department of Revenue. Consent to the election must be given by all members of the electing PTE or by any officer, manager, or member of the electing PTE who is authorized to make the election on behalf of all members of the electing PTE. In order to qualify for the alternative PTE income tax election, all PTE members must be either individuals subject to the individual income tax or pass-through entities entirely owned by individuals subject to the individual income tax. If the alternative PTE income tax is elected by an eligible PTE, each individual would receive a corresponding refundable tax credit equal to the alternative PTE tax paid by the individual on the distributive share. The newly established alternative PTE income tax, which is applicable to tax years beginning on or after Januand before January 1, 2024, imposes a 9 percent tax on the first $250,000 of distributive proceeds and a 9.9 percent tax on any amount exceeding $250,000. Signed by Oregon Governor in July of 2021, S.B 727 establishes an elective pass-through entity (PTE) business alternative income tax based on the PTE’s distributive proceeds. New Pass-Through Business Alternative Income Tax Here are the latest news and updates on Oregon state and local tax.
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