Chamber Signs On in Support of SALT Parity
Pikeville, KY (January 23, 2023) – The Southeast Kentucky Chamber of Commerce has joined a coalition of organizations in support of passing State and Local Tax Parity Relief for Kentucky Small Businesses. Other organizations in support include the Kentucky Chamber of Commerce, Commerce Lexington, Greater Louisville, Inc., and the Kentucky Society of Certified Public Accountants.
While the Tax Cuts and Jobs Act (TCJA) of 2017 included numerous provisions to support economic growth, changes made to the State and Local Tax (SALT) deduction have left some small business owners at a disadvantage. Corporations are able to fully deduct state and local taxes from their federal taxable income, yet small businesses structured as pass-through entities face limitations. The IRS has approved a fix that states can implement to reduce federal income taxes on small business owners without impacting state revenues.
Passing SALT Parity Relief Legislation in Kentucky Would:
- Save Kentucky employers an estimated $40 million per year in reduced federal income taxes
- Create parity between corporations and pass-through businesses when it comes to utilizing the federal SALT deduction
- Bring Kentucky into alignment with 30 other states as well as several other states currently considering SALT Parity Relief legislation
- Prevent Kentucky employers from relocating to other states with SALT parity between pass-through businesses and corporations
- Have NO IMPACT on state revenues - businesses would realize savings at the federal level
TCJA capped the SALT deduction at $10,000. For pass-through businesses – which are taxed at the owner-level – this limitation serves to increase their federal taxable income. The IRS permits states to offer pass-through business owners the option to elect to pay income taxes at the entity-level, which allows them to fully utilize the federal SALT deduction. 29 of the 41 states with individual income taxes have already passed SALT Parity Relief legislation, including neighboring states like Ohio, Missouri, and Virginia. Indiana and West Virginia are considering legislative proposals. This legislation is designed to be revenue neutral and also protects small business owners from double taxation at the state-level. States get their revenues, and an important federal tax deduction for small businesses gets restored.
The Southeast Kentucky Chamber of Commerce is located at 178 College Street in Pikeville and serves more than 500 businesses in eight Eastern Kentucky Counties: Floyd, Johnson, Knott, Lawrence, Letcher, Magoffin, Martin, and Pike. The Chamber’s mission is to serve the businesses of Southeastern Kentucky through a commitment to networking, advocacy, education, and collaboration as we partner together to enhance the business climate in our region.