I am writing to express my strong support for Oregon’s Pass-Through Entity Elective (PTE-E) Tax, and to highlight the many positive impacts this policy is having for our state. As a constituent, business owner, and practicing CPA, I believe the PTE-E Tax is a thoughtful, effective tool that advances economic fairness, supports small businesses, and protects Oregon’s fiscal health. As a CPA in Ontario, Oregon, my Firm represents many Oregon small businesses in the size range of $100,000 to $50M of gross revenues. These are the small businesses the PTE-E was designed for and those who most benefit from this legislation.
The Positive Impacts of the PTE-E Tax
1. Mitigates Disadvantages from the Federal SALT Cap
The PTE-E Tax was created in response to the $10,000 cap on the Federal State and Local Tax (SALT) deduction. By allowing pass-through entities (partnerships and S-corporations) to pay income tax at the entity level, which is deductible on the Federal return, Oregon business owners can effectively restore some of the tax benefit lost due to the SALT limitation.
The One Big Beautiful Bill, passed in July, attempted to reduce the negative impact of the SALT limitation by raising the cap to $40,000, but is still not perfect, and in some cases reduces the cap to $10,000.
The PTE-E helps Oregon entrepreneurs and small-business owners remain competitive, particularly when many out-of-state jurisdictions make more favorable use of pass-through arrangements.
2. Revenue-Neutral for the State
Importantly, the PTE-E Tax is designed to be revenue-neutral for Oregon. According to the Department of Revenue and tax statistics, the total tax paid via PTE-E roughly equals the refundable credits claimed by business owners.
This means the policy does not impose a net cost on the state budget, yet it provides meaningful relief to taxpayers facing the Federal SALT cap. The argument could be made that the PTE-E accelerates the timing of when taxes are collected because in my experience, most businesses will readily pay quarterly estimated PTE-E taxes, but may not do so at the individual filing level.
3. Supports Small and Actively Managed Businesses
The program encourages small business growth and reinvestment. As noted by the Oregon Senate Committee on Finance & Revenue, the policy objective is to help businesses that are actively managed (not just passive investments) by providing a more favorable rate structure.
This aligns with broader economic goals: incentivizing entrepreneurial activity, job creation, and reinvestment in Oregon.
4. Encourages Long-Term Stability
By giving business owners a way to reduce their Federal tax burden (through a deductible entity-level tax) while preserving their Oregon tax-credit, the PTE-E encourages capital to stay invested in Oregon rather than being shifted or restructured purely for tax reasons.
Furthermore, the ability to apply a PTE-E tax refund to the next tax year as an estimated payment (allowed starting in tax year 2024) adds a layer of cash-flow management that benefits growing firms.
5. Sunset Design
The original framework included a sunset if the Federal SALT limitation were repealed, or for tax years beginning before January 1, 2026 , which underscores that the PTE-E Tax is a targeted, responsive policy—not a permanent rate hike. Additionally, given that Senate Bill 111 did not pass to extend the applicability of the law beyond its original sunset of December 31, 2025, Oregon small businesses are left not knowing if they’ll need to pay 4th quarter estimated PTE-E payments in 2026, or if they should accelerate them to December 2025 to receive the deduction before the sunset. This creates further uncertainty regarding timing of 2026 quarterly estimated tax payments. Clarity in the future sunset of the PTE-E would greatly benefit Oregon small businesses to plan.
A Call for Support
Given these benefits, I respectfully urge you to support and defend the PTE-E Tax. In particular:
· As we approach future budget debates, please ensure the PTE-E Tax remains part of Oregon’s tax toolkit.
· Support efforts to streamline administration and communication so more eligible pass-through entities can make informed elections.
· Encourage education and outreach to small business owners, helping them understand how to leverage this policy to reduce their overall tax burden while benefiting the state.
The PTE-E Tax is not just a technical fix—it is a policy that strengthens our small businesses, the Oregon business climate, respects the realities of Federal tax constraints, and safeguards Oregon’s fiscal health without compromising fairness.
