The American Institute of Certified Public Accountants (AICPA) has released a new set of resources to reinforce its ongoing advocacy for preserving the Pass-Through Entity Tax (PTET) workaround to the federal State and Local Tax (SALT) deduction cap.
These updates support tax professionals and business owners navigating the evolving regulatory landscape, especially those relying on PTET to mitigate the impact of the $10,000 SALT deduction limit imposed by the 2017 Tax Cuts and Jobs Act.
Why This Matters
The PTET workaround, as recognized under IRS Notice 2020-75, allows partnerships and S corporations to deduct state taxes at the entity level. This effectively bypasses the federal SALT cap for individuals and improves tax efficiency.
The AICPA’s updated resources aim to:
- Provide clarity on PTET election processes
- Minimize compliance risks for taxpayers
- Influence long-term IRS and Treasury guidance
“The PTET offers critical relief to small and mid-sized businesses. We urge federal authorities to ensure its continuity,” said Jan Lewis, Chair of the AICPA Tax Executive Committee.
Key Resources Released by AICPA Include:
- A detailed PTET Overview & FAQ for CPAs and taxpayers.
- A state-by-state PTET election map to guide multistate filers.
- Updates on AICPA’s advocacy initiatives for 2025 to preserve SALT deduction options.
How This Impacts Your Business
Businesses structured as pass-through entities could face financial setbacks if the IRS doesn’t clarify PTET regulations. A lack of uniform guidance may result in audit discrepancies, increased compliance costs, and hesitancy to rely on the PTET strategy.
How Virtue CPAs Supports You
At Virtue CPAs, we help pass-through entities optimize their tax positions with clarity and confidence. Our tailored services include:
- Business Tax Planning to align with PTET requirements
- State & Local Tax (SALT) Advisory for multi-state compliance
- Ongoing IRS guidance monitoring to keep you informed
Whether you’re a single-state S Corp or a multi-entity partnership, our experts ensure you’re leveraging PTET properly while staying compliant.