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Take Action: PTEs ability to deduct SALT in jeopardy
Written on May 30, 2025
Please urge Congress to retain the entity level deductibility of SALT for all pass-through entities, as originally intended by the Tax Cuts and Jobs Act of 2017 (TCJA), approved by the IRS in Notice 2020-75 and currently in effect in Ohio with the IT 4738.
While many headlines have highlighted the positive impact of the section 199A deduction rising from 20% to 23% and the SALT cap increasing from $10,000 to $40,000, another provision tucked into the One Big Beautiful Bill Act (H.R.1) will negatively impact some pass-through entities (PTEs) that currently can deduct state and local taxes (SALT).
The legislation as passed by the U.S. House of Representatives, unfairly targets specified service trades or businesses (SSTBs) by severely limiting their ability to deduct SALT while allowing the deduction for non-SSTBs.
Therefore, SSTBs would be unfairly and economically disadvantaged simply by existing as a certain type of business, in effect widening the parity gap among (i) SSTBs, including accountants, and (ii) non-SSTBs and C corporations.
The Ohio Society made it a top priority to ensure Ohio was among the 36 states (see map) that enacted an entity level SALT deduction (S.B. 246, 134th GA), and later expanded to allow the resident tax credit to be taken for SALT income subject to other states’ PTE taxes.
Please take action now and contact your federal elected officials to ensure these OSCPA legislative victories do not become futile. It will only take a couple of minutes, and we have a template message already written for you.