Lawyers and accountants fight back as Trump tax bill targets SALT workaround

Lawyers and accountants fight back as Trump tax bill targets SALT workaround

A major lobbying battle is unfolding in Washington as US accountants, lawyers, and other professional service groups push back against a provision in Donald Trump’s proposed tax package that could raise their federal tax bills by tens of billions over the next decade, the Financial Times reported.

A hidden change with major consequences

At the centre of the fight is a clause in the “One Big Beautiful Bill Act” that would block professional services partnerships—such as law firms, accounting practices, dental clinics, and consultancies—from using a widely adopted workaround that helps offset the 2017 SALT (state and local tax) deduction cap. The SALT cap, set at $10,000 under Trump’s 2017 Tax Cuts and Jobs Act, hit high earners in blue states especially hard.

To soften the blow, 36 states created a workaround allowing partnerships to pay state taxes at the entity level, reducing federal taxable income. But the House version of the new bill proposes banning this workaround for “specified service trades or businesses,” which covers a broad swath of professionals, while still allowing other sectors to use it.

Outcry from professional groups

The move has ignited a wave of lobbying. The American Bar Association called it “fundamentally unfair” for singling out one class of business. ABA president Bill Bay argued that most law firms are small operations, with over 75% of US lawyers working in solo or small-firm setups.

The American Institute of Certified Public Accountants (AICPA) also denounced the measure as “ugly” and coordinated a letter-writing campaign across all 53 US states and territories. Melanie Lauridsen, AICPA’s vice-president of tax policy, warned that the provision is “complicated and buried,” and that its $73 billion revenue projection over 10 years unfairly burdens a specific set of pass-through businesses.

Senate-House negotiations heat up

The provision is part of broader negotiations between the Republican-controlled House and Senate over Trump’s expansive new tax and spending bill. The House bill proposes raising the SALT cap to $40,000 to appease suburban taxpayers in high-tax states like California and New York, but to make the change budget-neutral, it includes restrictions like the one on professional service firms.

Top Senate Republicans are reportedly reluctant to fully raise the cap, calling it regressive and costly, but some House members insist on lifting it, making offsets like this one essential for passage.

Professional sector warns of inequality

Critics argue that the measure would create a tax disparity between professional services partnerships and other pass-through entities or corporations that can still use the workaround. They warn it could disincentivize entrepreneurship and penalize small businesses that already operate under high regulatory and tax burdens.

As final negotiations continue, professional groups are pressing senators to strike the provision before the bill becomes law. The outcome could significantly reshape tax liabilities for millions of high-earning professionals—and further inflame debates over fairness in the US tax code.