As a result of advocacy efforts, the final version of the federal reconciliation bill, the One Big Beautiful Bill Act (OBBB), that President Trump signed into law on July 4 retains the ability of all pass-through entities (PTEs) to continue deducting state and local taxes (SALT) at the entity level.
The Ohio Society of CPAs expresses appreciation to both Senator Husted and Senator Moreno and their staff for listening to our concerns and engaging on this issue. We also want to thank our members who utilized our “Take Action” campaign to reach out to them.
The original version of the legislation passed by the U.S. House of Representatives, unfairly targeted specified service trades or businesses (SSTBs) by severely limiting their ability to deduct SALT while allowing the deduction for non-SSTBs.
The U.S. Senate took a different approach in the version it released on June 16. Under that plan, all pass-through business owners could get SALT deductions, but they were limited to either $40,000 or 50% of the entity level filing benefit, whichever is greater. The Senate later amended the OBBB addressing these concerns by allowing all PTEs to continue taking unlimited SALT deductions as intended.
An AICPA letter sent June 28 to Senate leadership expressed strong support of tax-related provisions included in the Senate’s version of the OBBB. Click here for a comprehensive summary of the OBBB.
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. The recently enacted Ohio budget bill also includes a provision to fix the multi-tier PTE issue.