Washington, D.C. (May 13, 2025) – Following yesterday’s release of bill language, the House Ways & Means Committee met today to pass its portion of the budget reconciliation bill. While we applaud the work of the committee in including several tax provisions that have been long-supported by the American Institute of CPAs (AICPA), the bill also includes provisions that the AICPA has previously shared significant concerns with due to the potential detrimental impact they would have on pass-throughs, which make up the vast majority of businesses.
The AICPA is signaling its strong endorsement of the following provisions in the reconciliation bill:
An increase in the standard deduction for years 2025-2028.
Making the tax bracket rates under the Tax Cuts & Jobs Act (TCJA) permanent.
Inclusion of legislation to expand the use of section 529 accounts for costs associated with obtaining a post-secondary credential, which grants financial flexibility to those pursuing or advancing in the accounting profession. This is a longstanding priority for the AICPA and the accounting profession.
Repeal of the American Rescue Plan Act’s lowered threshold for Form 1099-K to $600 for an unlimited number of transactions; the reconciliation legislation will return the requirement to a $20,000 threshold and over 200 transactions.
Provision regarding section 174 research and experimental expenditures, which may now be expensed for domestic research or experimental expenditures under new section 174A.
Provision regarding the Paid Family and Medical Leave Tax Credit Extension and Enhancement Act, which would provide certainty to businesses by making a temporary paid family leave tax credit permanent.
Retention of the TCJA higher exemption amounts for the individual alternative minimum tax (AMT), which simplifies filing for many taxpayers.
Provision regarding section 163(j), which reinstates the earnings before interest, taxes, depreciation and amortization – or EBITDA – limitation.
Retention of the Section 199A qualified business income (QBI) deduction, increased QBI deduction and modification of the specified service trade or business (SSTB) limitation.
Preservation of the current availability of the cash method of accounting for tax purposes.
The AICPA has significant concerns with certain provisions in the reconciliation legislation, including:
The proposed bill would unfairly exclude SSTBs from deducting state and local income taxes at the partnership level, as is currently permitted. The targeting of SSTBs would indirectly increase taxes on millions of service-based businesses and expand the disparity in how the tax code treats C corporations versus pass-through entities. The AICPA believes that Congress should retain the current ability for pass-through entities – which make up the vast majority of businesses – to deduct the entity’s state and local taxes at the federal level.
The permanent suspension of personal casualty loss deductions not attributable to federally declared disasters. The AICPA has supported reinstating the casualty loss deduction to pre-TCJA rules.
“While the AICPA remains grateful for the diligent work of the Ways & Means Committee to provide taxpayers and practitioners with common-sense tax policies that will have a continued benefit to the country and on the tax administration process, we remain deeply troubled by the proposed changes to the PTET deduction. The changes to this vital deduction are unfair to businesses that are the backbone of the American economy, which include accounting firms, medical offices and Main Street businesses, of which the majority are structured as pass-throughs,” said AICPA President & CEO Mark Koziel, CPA, CGMA.
“It is integral that we have parity amongst all types of entities; the AICPA is committed to ensuring that the guiding principles of good tax policy and the interests of taxpayers and tax practitioners are taken into account during the reconciliation process, as these policies will have a significant impact on both. We will continue advocating for policies that exemplify the guiding principles that drive success throughout the profession. Treating any service business more harshly does not seem to follow the principles of good tax policy, such as neutrality, simplicity, fairness, certainty and transparency,” Koziel continued.
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with 397,000 members and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. A founding member of the Association of International Certified Professional Accountants, the AICPA sets ethical standards for the profession, attestation standards, and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state, and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, partners across the profession to build future talent, and drives continuing education to advance the vitality, relevance, and quality of the profession.
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Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com