But in fact, all sorts of otherwise unassuming changes to the federal tax code can end up affecting states. That's because every state with an income tax pegs its own tax code to the federal tax law one way or another, for the convenience of its residents. Had Congress arranged the pass-through deduction to reduce the entity's income before it's reported on the individual tax form, then owners in all these states would have gotten a state tax cut, too. (The placement of the pass-through tax cut is curious. (For example: the higher standard deduction created by the tax cut.)

Source: Forbes February 25, 2018 17:37 UTC