SB 22-124 Summary

• Allows S corporations and partnerships to elect to pay state income tax at the entity level beginning January 1, 2018, rather than passing through income to individual owners.

• Entities making the election file amended composite tax returns between September 1, 2023 and July 1, 2024 for tax years 2018-2021, with no penalties or interest assessed.

• Establishes a tax credit for electing pass-through entity owners equal to their pro-rata share of entity-level taxes paid, designed to avoid double taxation and maintain revenue neutrality.

• Exempts S corporations and partnerships making the entity-level tax election from requirements to file separate nonresident owner agreements or make payments for each nonresident shareholder or partner.

• Allows resident partners to claim credit for taxes paid by partnerships to other states that do not tax pass-through entity income at the partner level.