On February 25, Reps. Jason Smith (R-MO) and Henry Cuellar (D-TX) and Senator Steve Daines (R-MT) introduced the “Main Street Tax Certainty Act of 2021,”(H.R. 1381/S.480) a bill that would make the current 20 percent tax deduction available to passthrough entities permanent. PIA strongly supports this legislation and is working with a coalition of business groups to advocate in support of it. PIA’s support was noted in Rep. Smith’s press release that can be viewed here.
PIA actively advocated for the passage of the tax bill signed into law at the end of 2017 (Public Law No. 115-97) because it provided subchapter S corporations, also known as “passthrough” corporations, with more favorable tax treatment. The law includes a tax deduction in Section 199A for owners of small businesses, reducing the potential tax burden on insurance agencies that organize as passthroughs. Many PIA member agents own independent insurance businesses that are organized as S corporations.
Unfortunately, unlike the permanent tax relief provided in the law to entities organized as C corporations, the passthrough deduction is temporary. As a result, the benefit for eligible PIA members will no longer be available after December 31, 2025. The provision’s scheduled sunset deprives small business owners of certainty regarding their future tax liability and leaves them unable to rely on the ongoing availability of this deduction. The Main Street Tax Certainty Act will resolve this uncertainty for eligible passthrough corporations by ensuring that they receive this tax relief permanently.
Passage of the Main Street Tax Certainty Act is a PIA top priority; PIA is working to build strong bipartisan support for it in Congress so that it passes well before its scheduled sunset date in 2025.