S.45, a bill designed to create an elective pass-through entity tax for Vermont business owners, successfully passed the Senate during the week of March 3, 2023. The bill was approved by voice vote. The National Federation of Independent Business (NFIB) has consistently supported this measure and expressed gratitude towards Senator Thomas Chittenden, D-Chittenden Southeast District, for sponsoring the bill and ensuring its passage through his committee with unanimous support.
The cap on State and Local Tax (SALT) deductions was introduced in the 2017 Tax Cuts and Jobs Act as a measure perceived to target blue states like Vermont. In response, several states have implemented IRS-approved SALT cap workarounds to counteract this policy. Without such measures, Vermont would send millions in tax dollars to Washington that other states would not, potentially placing it at a competitive disadvantage. The goal is to retain federal funds within Vermont to benefit its residents.
The bill now advances to the Vermont House of Representatives, where it may encounter less support than it received in the Senate.
