On Dec. 22, 2017, President Trump signed into law the widest-ranging tax reform legislation in decades. The legislation will impact the tax liability of agents and brokers in 2018 and beyond.
The centerpiece of the law is a reduction of the corporate tax rate from 35% to 21%—a significant reform that will positively impact the thousands of Big “I” members organized as C Corporations. The law also changes tax rates for individuals and creates a special deduction for many small businesses, including insurance agencies.
The Big “I” government affairs team will continue to update our webpage with the latest information on tax reform and exclusive resources for Big “I” members.
The resources are intended to help Big “I” members navigate the salient provisions of the new law, which spans over 500 pages of legislation. Big “I” members can find a two-page chart that outlines the major provisions of the new law, as well as a ten-page white paper, “Tax Reform: What Independent Insurance Agents & Brokers Need to Know.”
Note, however, that the impact of the law will vary depending on the individual circumstances of tax filers. Consult with your accountants, lawyers and other relevant tax and estate planning professionals for advice based on your individual circumstances.
As tax reform progressed through Congress, the Big “I” led a coalition of other major producer groups expressing concerns about the bill’s initial treatment of some small businesses. This effort led to improvements in the treatment of pass-through entities in the final law. The Big “I” was also the only insurance group to work closely with the American Society of Association Executives and a small group of other trade associations to strike a provision that would have subjected association name and logo royalties income to the unrelated business income tax for the first time. This change eliminated a new tax liability of millions of dollars per year for the national association and our state associations that would have led to decreased services for independent insurance agents and brokers.
Now, the Big "I" will continue advocating with Congress and the Administration on behalf of members regarding recent changes to the tax code, as well as other tax measures that could impact insurance markets or Big "I" members, such as retirement savings. As implementation of the law begins, the Internal Revenue Service will be issuing regulations and guidance, and interpreting provisions of the law that will impact tax planning for insurance agents and brokers moving forward. Keep an eye on the News & Views e-newsletter and the Big “I” tax webpage for future updates on tax reform implementation.
Jennifer Webb is Big “I” federal government affairs counsel.