I understand that state tax payments generally reduce US corporate taxable income 1:1. I would like to confirm that no state (or at least for Massachusetts) allows the deduction of US taxes/estimated taxes paid in the computation of state( MA) corporate taxable income. If it matters, this is a C corporation using CASH accounting.
Last time I looked (about 3 two years ago), AL, IO, LA & MO allowed a deduction for federal taxes paid on the corporate return. I believe they do the same thing for the personal income tax.
Echoing Alan: Alabama, Iowa, Louisiana, and Missouri are the only states that allow corporations a deduction for federal income taxes. South Dakota does also, but the SD corporate tax applies only to banks and financial corporations, not to general business corporations.
Kansas allowed a federal income tax deduction before 1971. Arizona allowed it also; I don't remember when that was repealed, but it was more recently, within the last 20 years I think.
And Massachusetts never has allowed the deduction as far as I know.
Katie in San Diego
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