Inputs

  • State allocation array: 1–5 entries of { stateCode, qbiAllocation: USD }
  • Entity type: S-corp / partnership / LLC-as-S / LLC-as-partnership
  • Federal marginal bracket: 32% / 35% / 37%
  • Optional: owner residency state, number of owners

Per-state formula

entityTax        = qbiAllocation × stateEntityRate
federalDeduction = entityTax × federalBracket
creditCaptured   = entityTax × creditMultiplier(ownerCreditType)
qbiOffset        = entityTax × 0.20 × federalBracket
netBenefit       = federalDeduction − qbiOffset

recommendation   = elect          if netBenefit / entityTax ≥ 0.20
                   borderline     if netBenefit / entityTax ≥ 0.05
                   don't elect    otherwise

The creditMultipliervalues are a scaffolding heuristic: refundable = 1.0; partial-refundable = 0.5; non-refundable = 0.85 (most owners exhaust state liability eventually); carry-forward-only = 0.6 (time-value-of-money discount). Per-state ownership-share refinements (e.g., CA's 12.5%-per-unpaid-share rule) appear in the state-specific note rather than the multiplier itself.

Worked examples (state-DOR-pinned)

The build-time fixture suite reproduces the following state-DOR-published or IRS-Notice-2020-75-aligned scenarios. Each must reproduce to the dollar before any release.

ca-singleowner-500k

California — single-owner S-corp with $500,000 qualified net income

A CA single-owner S-corp with $500,000 of qualified net income elects PTET. Entity pays $46,500 (9.3% × $500K) to FTB. At a 37% federal bracket, the entity-level deduction saves $17,205 in federal tax. After QBI offset (~20% × 37%), net benefit is ~$13,764 — versus zero deduction without the election (SALT cap blocks personal-tax deduction).

Expected totals: entity tax $46,500 · federal deduction $17,205
ny-singleowner-1m-graduated

New York — partnership with $1,000,000 qualified net income (graduated rates)

A NY partnership with $1M of qualified net income elects PTET. The first $2M of pool income is taxed at 6.85% — so all $1M here falls in the lowest graduated bracket. Entity pays $68,500 to NYDTF. At 37% federal bracket the deduction saves $25,345; net of QBI offset, ~$20,276.

Expected totals: entity tax $68,500 · federal deduction $25,345
ny-bigowner-10m-graduated

New York — S-corp with $10,000,000 qualified net income (3-bracket walk)

A NY S-corp with $10M of qualified net income walks three brackets: $137K at 6.85% on the first $2M, $289.5K at 9.65% on the next $3M, $515K at 10.30% on the next $5M — total $941,500. Federal deduction at 37% is $348,355. Picker uses the actual NY rate schedule (engine ./rate-schedules.ts).

Expected totals: entity tax $941,500 · federal deduction $348,355
il-multimember-2m

Illinois — multi-member LLC with $2,000,000 qualified income

An IL multi-member LLC (taxed as partnership) with $2M of qualified income elects PTET. Entity pays $99,000 (4.95% flat × $2M). Federal deduction at 37% is $36,630. Owners receive a refundable IL credit equal to the $99K paid.

Expected totals: entity tax $99,000 · federal deduction $36,630
ny-nyc-stacked-2m

NY State + NYC PTET stacked — partnership with $2,000,000 NYC-source income

An NYC-source partnership stacks both elections. NY State PTET on $2M at the lowest bracket (6.85%) is $137,000. NYC PTET (3.876% flat) on the same $2M is $77,520. Combined entity-level tax: $214,520. Combined federal deduction at 37%: $79,372. The picker's stacking-hint feature flags this combination automatically.

Expected totals: entity tax $214,520 · federal deduction $79,372
nj-bait-3m

New Jersey — S-corp with $3,000,000 BAIT-eligible income (2-bracket walk)

NJ BAIT graduated rates walk three brackets on $3M: $14,187.50 at 5.675% on the first $250K, $48,900 at 6.52% on the next $750K, and $182,400 at 9.12% on the next $2M — total $245,488. Federal deduction at 37%: $90,830. NJ BAIT was the earliest enacted PTET regime (2020).

Expected totals: entity tax $245,488 · federal deduction $90,830
ma-flat-500k

Massachusetts — partnership with $500,000 qualified taxable income

A MA partnership with $500K of qualified taxable income elects the PTE excise. Entity pays $25,000 (5% flat × $500K). Federal deduction at 37% saves $9,250. Owners receive a 90% refundable credit ($22,500) against MA personal income tax.

Expected totals: entity tax $25,000 · federal deduction $9,250
tri-state-ca-ny-il

Tri-state allocation — CA $400K + NY $400K + IL $200K

A three-state allocation across CA / NY / IL. Each state computes independently; only the federal-bracket arbitrage at 37% aggregates. Total entity-level tax $74,500; total federal deduction $27,565. Net of QBI offset (~$5,513): aggregate net benefit ~$22,052. NY is in the first graduated bracket (6.85%).

Expected totals: entity tax $74,500 · federal deduction $27,565

Known engine gaps (transparent)

  • Graduated rates. States with graduated PTET rates (NY, NJ) currently return the second-bracket approximation. Full rate-schedule wiring is queued as a post-Wave-1 task. Picker shows the partial calc; users should not rely on it for filing.
  • Owner-residency credit allocation. The engine currently applies a uniform creditMultiplier per state; in reality, refundability is owner-residency-specific. The picker flags this in the per-state output note when an owner-residency state is specified.
  • State manifest coverage. Marquee states (CA, NY, NYC, NJ, IL, MA) are primary-source verified. The remaining ≈30 enacting states are stubbed from CBIZ + EisnerAmper cross-checks and render with [PLACEHOLDER] until the Wave 1 Agent A deep manifest is integrated.
  • OBBBA $500K MAGI phaseout. The federal comparison-scenario math on /salt-cap-explained assumes the user is above the phaseout (effectively a $10K floor). Owners with MAGI between the SALT-cap raise and the phaseout boundary should run their numbers with their preparer.