Federal Legislation Proposed Impacting Pass-Through Entity Tax
May 16, 2025
The OSCPA, alongside the AICPA and other societies, is monitoring proposed federal legislation on the Pass-Through Entity Tax (PTET) that could have serious implications for the CPA profession.
The current iteration, which was approved by the House, would subject specified service trades or businesses (SSTBs)—including accountants, attorneys, dentists, and physicians—to the individual cap on state and local income tax deductions by eliminating PTET elections.
This would apply across all income levels and regardless of where the taxpayer resides, effectively penalizing thousands of professionals and business owners nationwide by increasing taxes on the partners/owners of many service-based businesses, such as accounting firms, discourage the creation and growth of such businesses, and further expand the disparity between C corporations and pass-through entities.
On June 19, the U.S. Senate made provisions to the bill, showing effort to improve and correct the targeting of SSTBs.However, some language which causes inequitable treatment of pass-through entities compared to corporations remained and would still result in a tax increase for all pass-through businesses, such as CPA firms.
Following further Congressional discussions, a revised version of the bill was set for an initial vote in the Senate, which would preserve the SALT deductions for certain pass-through businesses, including accounting firms. The bill is still progressing through the Senate before heading back to the House for another vote.
Your Voice Matters
In May, OSCPA members spent time in Washington, D.C. discussing this bill and others with U.S. Congress members representing Oklahoma.
We are continuing to monitor developments and will provide updates as we work alongside the AICPA to advocate for CPA firms and small businesses.
Learn more about the bill from the AICPA and find links below to help you get involved and stay informed: