Trump Tax Plan Faces Resistance from Legal and Accounting Firms

The House just passed Trump’s “One Big Beautiful Bill”, but don’t let the name fool you. While it bumps the SALT deduction cap to $40,000 and dangles fresh breaks for top earners, it also buries a controversial provision that’s got lawyers and accountants fuming. Now, as the bill heads to a divided Senate, professionals across the country are sounding the alarm. Why is there a buzz? Because buried in this sprawling proposal is a clause that could cost service-based firms a whopping $73 billion over the next decade, all to fund tax relief for others. And yes, it’s targeted. And yes, they’re mad.

The SALT Loophole

Here’s the kicker. The 2017 Tax Cuts and Jobs Act capped state and local tax (SALT) deductions at $10,000, which smacked high earners in blue states. To cushion the blow, 36 states cooked up a workaround: partnerships like law firms and CPA practices could pay state taxes at the entity level and deduct them federally. But Trump’s new tax plan flips that script. While most industries still get to use the workaround, “specified service trades or businesses”—think lawyers, CPAs, consultants, dentists—get benched. That’s the carveout, and it’s causing chaos. “The math works because professionals are footing the bill,” one observer put it—and they’re not wrong.

Professional groups didn’t hold back. The American Institute of CPAs (AICPA) branded the clause “ugly,” while the American Bar Association called it “fundamentally unfair,” highlighting that over 75% of U.S. lawyers work in small or solo practices, often structured as pass-through entities. “This is targeted, and it’s ugly. It’s complicated and it’s buried,” said Melanie Lauridsen, AICPA’s VP of tax policy, who helped launch a 50-state campaign to strike the clause. Their biggest gripe? That this isn’t broad reform—it’s a sneak attack on a specific class of business already juggling complex compliance burdens.

Big Breaks for Big Pockets

Let’s not ignore the flip side—or how quickly it flipped. The House version of Trump’s “One Big Beautiful Bill” proposed raising the SALT deduction cap to $40,000, which would have overwhelmingly benefited high-income individuals, especially in suburban high-tax states like New York, California, and New Jersey. But as of June 16, the Senate Finance Committee slashed that cap back down to $10,000 in its first draft—undoing the House’s negotiated win. This reversal dramatically shifts the playing field and makes the previously targeted tax provision on professional service firms even harder to justify. Critics argue that with the higher SALT cap gone, there's now no financial reason to keep the $73 billion revenue grab from lawyers, accountants, and consultants. Yet the carveout remains—meaning professionals are still footing the bill for relief that’s no longer even in the bill.

One Bill to Rule Them All

The Senate version, released Monday by Republicans on the Finance Committee, preserves Trump’s 2017 tax cuts, proposes new breaks for businesses and wealthy individuals, and adds a $5 trillion debt ceiling increase. What’s more, it aims to make 100% bonus depreciation and R&D expensing permanent, moves that heavily favor capital-intensive and research-driven industries like tech, pharma, and manufacturing. Tax pros also flagged the temporary return of EBITDA-based interest deductions under Section 163(j), giving relief to highly leveraged firms. Meanwhile, nonprofits and universities may face a hike in excise taxes on endowment income, though the Senate version cut the top rate down to 8% from the House's proposed 21%.

Source: Bloomberg

Democrats argue the bill delivers “caviar over kids”, slashing Medicaid, gutting clean energy credits, and tossing working-class support systems overboard to fund corporate tax breaks. Senate Republicans, however, insist the bill prevents a $4 trillion tax hike, restores certainty, and delivers on Trump's pro-growth agenda. But notably absent? A finalized SALT cap resolution. The Senate draft leaves a $10,000 placeholder, with leaders admitting it’s still up for negotiation. That means professional service firms and high earners in blue states are still stuck in limbo, waiting to see if relief is coming or if they're footing the bill.

Planning Just Got Wrecked

Over the past few years, firms have rebuilt their tax strategies around the TCJA landscape—entity structuring, QBI optimization, income timing, and SALT workaround usage. Now, they may have to rip up the blueprint. Multistate firms face a logistical mess. Entity-level tax planning becomes a minefield. Scenario models, compliance playbooks, and client communications? All upended. “When even seasoned tax pros are left guessing, planning turns reactive—and that’s a lose-lose,” one advisor warned.

The House gave the bill a green light. The Senate? Still on the fence. Top Republicans are wary of the SALT cap hike, calling it “regressive and costly.” They may scale it back or tank it entirely. In the meantime, lobbying is intense. Professional service groups are pushing hard to yank the carveout before the bill reaches Biden’s desk. But with revenue neutrality on the line, cutting the clause could mean scrapping the cap hike—something moderate Republicans won’t love. It’s a classic D.C. standoff, with professionals stuck in the crossfire.

Brace for Client Blowback

If this provision passes, professionals will face a tough conversation with clients: why their deduction disappeared while real estate developers and consultants kept theirs. The issue isn’t just financial; it’s perceptual. It makes solo practitioners and small firms feel singled out and penalized for choosing a profession with ethical walls and limited growth levers. This isn’t about anti-tax reform. It’s about being excluded from it.

Bottom Line

The SALT carveout fight has done something rare: it’s united lawyers and accountants behind one banner. Their case is clear: don’t punish specific professions to fund tax breaks for others. The provision shrinks flexibility, spikes complexity, and signals a move away from parity in the tax code. The final Senate decision will decide whether this clause sticks. But no matter the outcome, the message is loud and clear: “We see you—and we’re not backing down.”