States Raise Serious Concerns Over PTET SALT Deduction Elimination, Highlighting Detrimental Impact on State Economies
June 12, 2025
States Raise Serious Concerns Over PTET SALT Deduction Elimination, Highlighting Detrimental Impact on State Economies
Washington, D.C. (June 12, 2025) – State CPA societies across the country are expressing their strong opposition to a provision in the One Big Beautiful Bill Act which would eliminate the ability of specified service trades or businesses (SSTBs) to deduct state and local taxes (SALT) at the entity level. In a letter to the Senate Finance Committee Chairman and Ranking Member, the American Institute of CPAs (AICPA), together with 53 state CPA societies, raised serious concerns with the removal of the pass-through entity tax (PTET) deduction of state and local taxes, which has helped to provide some parity between corporations and pass-throughs.
States are united in their criticism of the severe limitations on the deductibility of state and local taxes for SSTBs – here’s what some states are saying about this provision included in tax legislation passed by the House of Representatives:
“There are thousands of Wisconsin businesses that rely on the PTET SALT deduction to benefit from an otherwise limited deduction. Eliminating the opportunity to take this deduction would lead to higher tax liabilities, harming not only those businesses, but also the clients and customers those businesses serve and, ultimately, Wisconsin’s economy,” said Tammy Hofstede, President & CEO of the Wisconsin Institute of CPAs.
“Eliminating the PTET SALT deduction for service-based businesses threatens the backbone of North Carolina’s economy,” said Kelly Puryear, Chair of the NC Association of CPAs. “This change could drive up tax bills, push businesses out of state, reduce wages, cost jobs, and weaken our communities.”
“In 2022, Kansas recognized the value of the PTET deduction for our local businesses and economy and enacted PTET legislation, providing relief to pass-through entities. Targeting specified service trades or businesses by eliminating the ability to deduct SALT would cripple many local businesses throughout the state and cause great harm to many communities,” said Danielle Hologram, President & CEO of The Kansas Society of CPAs.
“Eliminating the pass-through entity tax deduction for specified service businesses unfairly penalizes small businesses and professionals including CPAs and accounting professionals who are vital to our local economies,” said Jodi Ann Ray, President & CEO of the Texas Society of CPAs. “This change undermines tax parity, disproportionately burdens small and mid-sized firms, and sends the wrong message at a time when fair, pro-growth tax policy is needed most."
“Professional services in Louisiana such as lawyers, accountants and pharmacists rely on the PTET SALT deduction to allow them to operate their businesses, create jobs and support our local economies,” said Ron Gitz, CEO of the Society of Louisiana CPAs. “Raising taxes on businesses such as these by eliminating the ability to deduct SALT will be a devastating blow to the local business community and discourage investment in our state. The Society of Louisiana CPAs has been actively advocating for the preservation of the PTET deduction for service-based businesses and we urge lawmakers to prioritize and protect these essential businesses.”
The letter signed by the AICPA and the state CPA societies underscores the detrimental impact removing this deduction for SSTBs would have on economic growth, noting an analysis by the Tax Foundation which shows that this provision will reduce GDP by 0.2 percent.
“If this provision is signed into law, CPAs across the country will be worse off than they were with the passage of the Tax Cuts and Jobs Act in 2017. The House-passed One Big Beautiful Bill Act does not provide simplicity nor fairness to millions of pass-through businesses that are job creators in our local towns and cities,” says the letter.
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with 397,000 members and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. A founding member of the Association of International Certified Professional Accountants, the AICPA sets ethical standards for the profession, attestation standards, and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state, and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, partners across the profession to build future talent, and drives continuing education to advance the vitality, relevance, and quality of the profession.