The House passed legislation on October 10 to reverse the state budget bill, restoring a business tax exemption for attorneys and lobbyists.

Senate Bill 26 was originally introduced to allow educators to claim an income tax deduction for out-of-pocket classroom expenses.

The House Finance Committee approved amendments to restore the deduction for attorneys and lobbyists excluded in the two-year state operating bill tax policy of House Bill 166.

Since 2013, the state business income deduction (BID) has allowed those deriving income from any pass-through entity (e.g., LLCs, LLPs) to pay no tax on the first $250,000 of income and a flat 3% on any income above the threshold.

House Bill 166 excluded otherwise eligible income from legal services provided by an attorney or income from legislative, executive agency, or retirement system lobbying activity beginning in 2020.

Senate Bill 26 has been re-referred to the Senate for final approval.