Side-by-side at $1,000,000 qualified income, 37% bracket
| Field | Arizona | Colorado |
|---|---|---|
| Statute | A.R.S. § 43-1014 (PTE election); rate tied to § 43-1011 | Colo. Rev. Stat. § 39-22-340 et seq. (SALT Parity Act); HB 21-1327 |
| Election deadline | [PLACEHOLDER: state DOR cite] — Pub 713 should be re-fetched to pin precise 2026 election deadline. | Election made on Form DR 0106 (partnership/S corp return) or in advance on Form DR 1705 (SALT Parity Act Election) or DR 0106EP (estimated payment with election). |
| Rate | 2.50% flat | 4.40% flat |
| Owner credit | refundable | refundable |
| Composite interaction | stacks | forced-out |
| §199A QBI reduction | Yes | Yes |
| Last verified | 2026-05-11 | 2026-05-11 |
Reference federal-arbitrage computation
Both scenarios assume $1,000,000 qualified net income, a 37% owner federal bracket, and no apportionment. Both reduce §199A QBI base proportionally; net benefit shown is the federal SALT-arbitrage less the rough QBI offset (~20% × bracket × entity tax).
Entity-level tax: $25,000. Net of QBI offset (~$1,850): $7,400.
Entity-level tax: $44,000. Net of QBI offset (~$3,256): $13,024.
Why owners with K-1 income across these two states care
Arizona and Colorado interact in three ways that matter to a multi-state K-1 holder: (1) independent elections — each state's PTET is its own election with its own deadline and form, so a missed AZ deadline does not affect CO; (2) aggregate federal deduction — the entity-level tax paid to BOTH states is deductible at the federal entity level under IRS Notice 2020-75, so the federal arbitrage compounds; (3) composite-return interaction may differ — see each state's row above.
Run the multi-state picker pre-filled with both jurisdictions: