Partnerships, limited liability companies and other businesses could keep using state and local tax deductions that would be repealed for individuals, the chairman of the House tax writing panel said in a letter Thursday.
House Ways and Means Chairman Kevin Brady said so-called pass-through businesses, which often pay sales taxes and certain property taxes, would be able to deduct those levies for purposes of their federal tax bills. His comments came in a letter to Representative Earl Blumenauer, an Oregon Democrat who serves on the committee.
State and local tax deductions have become a flashpoint in the debate over the GOP’s planned tax-overhaul legislation. The House bill would eliminate the break for individuals regarding sales taxes and state and local income taxes. It would preserve it for property taxes, with a cap of $10,000.
Some Republican House members in high-tax states, including New York, New Jersey and California, have said the House bill would hurt their constituents.
Brady’s letter says that state and local income taxes paid by an individual owner of a pass-through businesses would not be deductible.