The American Institute of CPAs (AICPA) has raised concerns about the pass-through entity tax (PTET) state and local tax (SALT) deductions as outlined in the latest Senate and House reconciliation bills.

The organisationhas endorsed several provisions in the Senate bill but remains apprehensive about the PTET SALT deduction.

In a detailed press release, it analysed this and other provisions, calling for clarification on the SALT proposal.

In May 2025, AICPA restated its stance against the proposed limitations on state and local tax (SALT) deductions for specified service trades or businesses (SSTBs) in the One Big Beautiful Bill Act.

Recently, the AICPA submitted a letter to the Senate Finance Committee leadership, outlining its endorsements, expressing concerns, and offering two additional recommendations.

One of the AICPA’s recommendations addresses the excess business loss (EBL) rule in the Senate Finance Committee’s reconciliation bill. The AICPA is concerned that the rule may result in a permanent disallowance of business losses under certain conditions.

Although the bill allows for carryforwards of EBLs from estates or trusts to beneficiaries, the AICPA warns that beneficiaries without business income may be unable to utilise the losses, potentially leading to indefinite carryforwards.

Additionally, the AICPA has recommended the restoration of the casualty loss deduction for all taxpayers, not just those affected by federally or state-declared disasters.

The current Senate bill proposal would permanently limit the deduction, creating a disparity in tax relief for taxpayers who suffer similar losses under different circumstances.

The AICPA argues that such a permanent limitation is unjust, as it fails to treat similarly situated taxpayers in a similar manner.

AICPA vice president of Tax Policy & Advocacy Melanie Lauridsen said: “The AICPA continues to express deep concern about the disparity in tax treatment that the Senate SALT proposal would create among pass-through entities and corporations, while also seeking clarity on the Senate’s proposal. However, we continue to advocate on behalf of the accounting profession on many other issues as well.”

“These additional recommendations – while less impactful than the PTET SALT deduction – are consequential to the tax system and taxpayers. We ask the members of the Senate Finance Committee to thoughtfully consider our recommendations.”