This week, the Big “I” joined other organizations in sending a letter supporting H.R. 216 and S. 1149, the “Main Street Tax Certainty Act,” by Rep. Jason Smith (R-Missouri) in the U.S. House of Representatives and Sen. Steve Daines (R-Montana) in the U.S. Senate.
A provision of the 2017 tax reform law added a section to the individual tax code (26 U.S.C. §199A) that created a new 20% deduction on “qualified business income” for some owners and shareholders of pass-through businesses, such as subchapter S corporations, partnerships and sole proprietorships. However, the deduction is only available through the end of 2025. The “Main Street Tax Certainty Act” would make this 20% deduction permanent.
Approximately two-thirds of the 20,000 insurance agencies and brokerages the Big “I” represents are organized as pass-through entities and are currently seeing significant benefits from the new deduction. In a huge win for the Big “I” and its members, recent Treasury regulations maximized those benefits for insurance agents and brokers. The new deduction has enabled insurance agency and brokerage owners to reinvest and grow their businesses, hire new employees, and better serve their consumers.
Unlike the new 20% deduction for small businesses, the C corporation rate reduction in the 2017 tax reform law was made permanent. The deduction H.R. 216 seeks to protect is crucial in allowing pass-through insurance agencies and brokerages across the country to compete with their C corporation counterparts that now have the benefit of a new permanent 21% tax rate.
Wyatt Stewart is Big “I” senior director of federal government affairs.