Your accountant sent you a one-line email in March: “We need to talk about your PTET election.” You ignored it because you thought the new tax bill fixed the SALT cap problem. It didn’t.
Here is the deal: the One Big Beautiful Bill Act changed the SALT cap in a way that helps some households. It did not change the basic PTET playbook that high earners in high-tax states rely on.
PTET survived because it is not a gimmick tucked inside the new bill. It is an entity-level state tax deduction approach the IRS already approved in prior guidance, and Congress left that structure alone.
What Actually Happened in the 2025 Tax Bill
Yes, the SALT cap went up. For 2025, the cap is $40,000, and it ticks up by 1% annually through 2029. In 2030, it reverts to $10,000.
The catch is the phaseout. Once modified adjusted gross income goes over $500,000, the cap starts shrinking. It gets reduced by 30% of the amount over that threshold, and it does not drop below $10,000. That means a lot of pass-through owners still end up living close to the old cap in practice.
That is the headline. The bill gave relief, but it did not make the SALT problem disappear for higher earners.
The Simple Reason PTET Still Matters
PTET exists because the federal SALT cap hits individuals. PTET shifts some state income tax payment from the owner to the business, and that tax can be treated as a deductible business expense at the entity level under existing IRS rules.
So when the SALT cap gets stingier for higher earners because of the phaseout, PTET can still be the difference between “stuck deducting $10,000” and “deducting a much larger share of the state income tax paid through the entity.”
The new bill did not “save PTET.” It just did not touch the IRS framework that makes PTET work, and it did not make the SALT cap irrelevant for the people most likely to care.
Quick History Behind PTET
PTET showed up after the 2017 tax law capped SALT deductions for individuals. States needed a workaround that stayed inside the rules.
The idea was simple. Instead of owners paying state income tax personally, the entity pays a state-level tax and the owners get a credit or similar mechanism on their state return. The economic state tax cost is usually meant to stay roughly the same. The federal outcome changes because of where the deduction happens.
After early uncertainty, the IRS confirmed the concept. That is why so many states adopted some version of PTET.
What The New Bill Changed for PTET
Not much, and that is the point.
The bill temporarily raised the SALT cap, but it layered in a phaseout that blunts the benefit once income crosses the threshold. It did not rewrite the IRS rules that PTET relies on.
So the world looks like this:
If your income sits below the phaseout range, the higher cap may reduce how often PTET matters.
If your income sits above it and you pay meaningful state income tax, the “SALT cap problem” is still very real, which is why PTET remains on the menu.
Two Mistakes People Still Make
People can argue the politics. The real mistakes are more boring.
Mistake 1: Assuming the higher SALT cap solves this for high earners.
The phaseout means plenty of higher-income pass-through owners do not actually get the full benefit of the higher cap.
Mistake 2: Treating PTET like a decision you can circle back to later.
PTET is state-run. Timing rules and mechanics vary a lot by state and entity type. If PTET is relevant, the practical move is to get the current-year rules for your state and entity in writing.
Closing Thought
The new tax bill did not kill PTET. If anything, it made PTET feel more quietly permanent because the SALT relief is real but uneven, and the IRS framework behind PTET is still standing.
Disclosure: This is educational content from Silly Money, not tax, legal, or investment advice. PTET rules vary by state and your situation is unique. The examples here are illustrative and are not specific tax guidance. Talk to a qualified CPA or tax attorney who knows your state’s PTET rules before making elections or estimated payments.
