NAIFA and a coalition of industry organizations has signed a joint letter to Congress urging lawmakers to protect a vital component of the federal tax code: the full deductibility of state and local business taxes known as the B-SALT (or C-SALT) deduction.

Since the passage of the Tax Cuts and Jobs Act (TCJA) in 2017, businesses across the country have benefited from a more competitive tax environment that has fueled investment, job creation, and wage growth. NAIFA supports efforts in Congress to make key provisions of the TCJA permanent including the individual, business, and estate tax reforms that have helped drive economic expansion. However, recent proposals to cap or eliminate the state and local tax deduction by businesses would be step backward. State and local business taxes are not discretionary; they are ordinary and necessary expenses incurred in the normal course of doing business. Denying businesses the ability to deduct these taxes would amount to a substantial tax increase, one that could severely undermine the gains of the past several years.

According to the Tax Foundation, limiting the B-SALT deduction would raise more than $600 billion in new taxes on businesses over the next decade, including:

• $226 billion in new taxes on pass-through entities such as S corporations and partnerships
• $223 billion from disallowing deductions for state and local corporate income taxes
• $209 billion from eliminating deductions for state and local property taxes paid by corporations

This change would affect businesses in every state and across all industries including Main Street small businesses that NAIFA members serve every day. NAIFA urges Congress to reject any effort to weaken the deduction. Preserving this provision is essential to sustaining economic growth and ensuring American businesses can continue to invest, hire, and thrive.