Larry's Tax Law

As reported earlier, Senate Bill 1510 (“SB 1510”), if passed and signed into law by Governor Tina Kotek, would extend the life of the Oregon state and local tax (“SALT”) workaround for eligible pass-through entities for two more tax years (i.e., through the 2027 tax year). 

SB 1510 was passed by the Oregon Senate on February 24, 2026.  That same day, it was introduced in the Oregon House of Representatives (“House”).  Yesterday, March 4, 2026, it received unanimous approval by members of the House (52 “yea” votes, with eight representatives absent).  Now, SB 1510 will be delivered to Governor Kotek for signing.  She is expected to sign SB 1510 into law.[1]

Two of our readers alerted me yesterday afternoon that Oregon lawmakers are attempting to keep the Oregon SALT workaround alive and well. 

Senate Bill 1510 (“SB 1510”) was introduced in the Oregon Senate on February 24 (hours after I put my pencil down from writing the last blog article and awaiting its publication).  The bill has been passed by the Senate and is currently waiting to be voted on by members of the House of Representatives.    

Unlike Senate Bill 211 (“SB 211”), which was introduced in the Oregon legislature during the 2025 session, SB 1510 is not a standalone bill solely focusing on extending the life of the Oregon SALT workaround.   Rather, a provision to extend the SALT workaround is sandwiched between three other provisions, namely a provision extending a property tax exemption for cargo containers, the repeal of a tribal tax exemption and a requirement that the board of tax practitioners register enrolled agents.

Background

Prior to the Tax Cuts and Jobs Act (“TCJA”), there was no direct limitation on an individual taxpayer’s deduction of his or her state and local taxes (“SALT”) on the federal individual income tax return.  Of course, for high-income taxpayers, the SALT deduction often triggered the alternative minimum tax.

The TCJA

As of 2018, the TCJA capped the SALT deduction for individuals at $10,000 per year for both single and married taxpayers filing jointly ($5,000 for married taxpayers filing separately).  Hence, the SALT cap contains an inherent “marriage penalty.” 

The OBBBA

The SALT cap, which was part of a compromise among lawmakers for an increase in the standard deduction under the TCJA, was scheduled to sunset at the end of 2025.  However, as previously reported, the One Big Beautiful Bill Act (“OBBBA”) amended and extended the SALT cap. 

The following are the key elements of the SALT cap, as extended under the OBBBA: 

1. The OBBBA amendment to the SALT cap applies to taxable years beginning after 2024.
2. The cap is now $40,000 ($20,000 in the case of a married taxpayer filing separately).  It increases by 1% each year but reverts to $10,000 ($5,000 in the case of a married taxpayer filing separately) in 2030.  The cap, as reduced in 2030 to $10,000 ($5,000 in the case of a married taxpayer filing separately), does not appear to sunset.  So, it becomes a so-called permanent provision of the Internal Revenue Code.  
3. Under the OBBBA, the cap is reduced by 30% of a taxpayer’s modified adjusted gross income to the extent it exceeds the threshold amount ($500,000 for married taxpayers filing jointly and single taxpayers, and $250,000 in the case of a married taxpayer filing separately).  However, the SALT cap cannot be reduced below $10,000 ($5,000 in the case of a married taxpayer filing separately).

After the SALT cap was introduced as part of the TCJA, the Internal Revenue Service announced in IRS Notice 2020-75, with respect to pass-through entities (LLCs or other entities taxed as partnerships or S corporations), that, if state law allows or requires the entity itself to pay state and local taxes (which normally pass through and are paid by the ultimate owners of the entity), the entity will not be subject to the $10,000 SALT cap.  As a consequence, many state legislatures passed so-called SALT cap workarounds for pass-through entities.  Oregon was among those states.

It seems like New Year’s Day 2025 was just a few weeks ago.  As I watch 2025 quickly come to an end, it is clear that time passed this year at lightning speed.

2025 was, in many respects, a terrific year, complete with new opportunities and many challenging tax projects.  I continue to be extremely grateful for the unwavering support of family, friends, clients and law colleagues!

During 2025, I was able to greatly expand my white paper, A Continuing Magical Mystery Tour Through Subchapter S – With a Stop at Many of the Obscure Destinations Along the Way.  It is now more than 220 single-spaced pages.  I recently presented it at New York University’s 84^th Institute on Federal Taxation in both New York City and San Francisco.  This paper provides tax practitioners with a thorough overview of the current state of Subchapter S and the traps that still linger within this tax regime for unwary taxpayers and their advisers.

I am pleased to share that the 84th Institute on Federal Taxation (IFT) will be held in New York City on October 19-24, 2025, and in San Francisco, California, on November 16-21, 2025.

At this year’s Institute, I will be presenting the latest version of my white paper, A Continuing Magical Mystery Tour Through Subchapter S, which is now well over 220 pages and contains a close look at several of the obscure aspects of Subchapter S.

During our session, we will embark on a journey through many of the not-so-obvious provisions of the Code and regulations that impact Subchapter S corporations and their shareholders, including some of the magical provisions of the Code and regulations.  We will round off our voyage by examining the key takeaways from notable cases and rulings that shape this highly nuanced area of tax law.

In this last installment of our multi-part series on the One Big Beautiful Bill Act (the “OBBBA”), my colleague, George Bonini, and I discuss three provisions of the OBBBA that impact many businesses, particularly those in manufacturing and capital-intensive industries.

Bonus Depreciation

As a result of the Tax Cuts and Jobs Act of 2017 (“TCJA”), businesses were permitted to immediately deduct (or expense) 100% of the cost of certain qualifying property placed into service during the taxable year instead of depreciating the property over several years. The deduction, commonly referred to as bonus depreciation, was scheduled to phase down by 20% each year starting in 2023 and be fully eliminated by the end of 2026. 

The concept of bonus depreciation is not new to our tax laws.  Various iterations of the concept have been in the Internal Revenue Code (“Code”) for decades.  In general, the impetus for bonus depreciation is twofold, namely: (i) to stimulate business investment in qualified property such as machinery and equipment; and (ii) to enhance the cash flow of businesses, allowing greater investment in operations, including expanding the workforce. 

Under Code Section 168(k), to qualify for the TCJA’s bonus depreciation, property acquired by the taxpayer must constitute “Qualified Property.”  Subject to specified exceptions, Qualified Property under the TCJA includes property that the Code assigns a depreciation recovery period of 20 years or less.

I have feverishly been reporting about provisions of the One Big Beautiful Bill Act and have left my multi-part series on Subchapter S adrift at sea.  Accordingly, I want to sneak in one more article in this Subchapter S series before turning my attention back to the Act.

Single-Class-of-Stock Requirement

In accordance with Code § 1361(b)(1)(D), an S corporation may not have greater than one class of stock.  The key to only having one class of stock is generally to make sure that all outstanding shares have identical rights to distribution and liquidation proceeds.  That concept, however, may be easily said, but it may be difficult to fully grasp, implement and monitor.  In this blog post, I aim to synthesize the complexities of this monumental rule of Subchapter S into an understandable set of guidelines.

In this ninth installment of my multi-part series on the One Big Beautiful Bill Act (the “Act”), I discuss provisions of the Act that may permit individual taxpayers to deduct the interest incurred with respect to their automobile loan.^[1]  While the concept appears straightforward, its application is replete with intricate rules.

Background

In accordance with Code Section 163(h)(1), subject to certain exceptions, “[i]n the case of a taxpayer other than a corporation, no deduction shall be allowed under this chapter for personal interest paid or accrued during the taxable year.”

Section 70203 of the Act temporarily amends Code Section 163(h) and provides that, for purposes of Code Section 163(h), personal interest does not include “qualified passenger vehicle loan interest.”  

The Act

To qualify for the new deduction on vehicle loan interest, several requirements must be satisfied.

In this eighth installment of my multi-part series on the One Big Beautiful Bill Act (the “Act”), I discuss provisions of the Act that impact the taxation of worker moving expenses.^[1]

Background

Historically, provided certain requirements were satisfied, Code Section 217 allowed a deduction for moving expenses paid or incurred by an employee or self-employed person in connection with his or her work.  For this purpose, moving expenses are generally defined as reasonable expenses incurred in moving household and personal effects and travel costs (excluding meals). 

The requirements for the deduction are straightforward but stringent.

In this seventh installment of my multi-part series on the One Big Beautiful Bill Act (the “Act”), I discuss provisions of the Act that impact the deductibility of individual charitable gifts under Code Section 170.^[1]

The Act impacts the deductibility of charitable contributions made by individual taxpayers in three ways, two of which are good news, and one of which may not be well received by many taxpayers.