A coalition of 53 CPA societies across U.S. states and jurisdictions has joined the American Institute of CPAs (AICPA) in opposing a provision in H.R. 1—the One Big Beautiful Bill Act—that would eliminate the state and local tax (SALT) deduction for certain pass-through entities (PTEs), including accounting firms.
In a joint letter to Senate Finance Committee leaders Senators Mike Crapo (R-ID) and Ron Wyden (D-OR), the AICPA and state CPA societies warned that the move would effectively raise taxes on service-based PTEs and have a detrimental impact on small and mid-sized firms nationwide.
“At a time in which tax reform is focused on job creation and economic growth, this will have the opposite impact,” the letter stated.
Economic Consequences and Industry Impact
Citing data from the Tax Foundation, the letter pointed out that removing the SALT deduction for specified service trades or businesses (SSTBs) could reduce the U.S. GDP by 0.2%.
The provision would disproportionately affect accountants, law firms, consultants, and other professional services by singling them out for unfavorable tax treatment.
The AICPA argues that this erodes the tax parity between corporations and pass-through entities, which was restored by the original Tax Cuts and Jobs Act of 2017.
“The House bill targets professionals simply based upon their chosen occupation. We believe that this is discriminatory and unfair,” the organizations wrote.
AICPA Speaks Out Against the PTET Cap
Melanie Lauridsen, Vice President of Tax Policy & Advocacy at the AICPA, recently elaborated on the organization’s concerns during an episode of the Journal of Accountancy Podcast.
“It goes against a lot of our guiding principles of sound tax policy,” Lauridsen said. “It lacks neutrality, fairness, simplicity, certainty, and transparency. There’s a lot of reasons why this proposal is deeply flawed.”
Proposed changes to the SALT deduction for PTEs aren’t just political—they’re financial. For small and mid-sized firms, this could mean higher tax bills and tighter margins. Virtue CPAs provides customized tax strategy and planning services to ensure you’re not caught off guard. Let’s work together to safeguard your business’s financial health.
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