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DOWNERS GROVE, ILLINOIS (April 16, 2025) – Businesses could be affected by possible limits or elimination of a tax deduction that has been in place for nearly eight years.
The C-SALT deduction refers to the corporate state and local tax deduction, which allows certain businesses to deduct state and local taxes from their federal taxable income. Businesses with locations in different states benefit from deductions on tax burdens from multiple states.
Recently, policymakers have debated limiting or eliminating the C-SALT deduction as a way to raise federal revenue to offset the cost of making the Section 199A deduction permanent. The Section 199A deduction, also known as the Qualified Business Income (QBI) deduction, is a tax benefit introduced by the Tax Cuts and Jobs Act of 2017 and allows eligible taxpayers to deduct up to 20% of their QBI from certain pass-through entities like sole proprietorships, partnerships, S corporations and some trusts and estates. Income earned through C corporations or as an employee does not qualify. The Section 199A deduction began for tax years starting after December 31, 2017 and will end December 31, 2025.
Capping or eliminating C-SALT deductions for affected businesses could increase their overall tax burden and potentially impact their investment and expansion plans. These tax changes could also include the Pass-Through Entity Tax (PTET) work-around for pass-through entities. PTET work-arounds were adopted by many states in response to the 2017 $10,000 SALT caps for individuals as it was not Congress’ intention to cap businesses’ ability to deduct SALT expenses when it placed SALT caps on individuals.
For more information about the discussion on C-SALT deductions, click here.
To contact your federal officials about preserving the C-SALT deduction and PTET work-arounds, visit Advocacy – National Sporting Goods Association .
Topics
Tax Deductions C-SALT PTET