PIA recently joined a coalition of business groups to express our continued support of the 20-percent tax deduction for the qualified business income of qualifying passthroughs businesses, or S corporations. The 20 percent deduction was established by the 2017 tax reform law.
PIA actively advocated for the passage of the 2017 tax bill (Public Law No. 115-97) because it provides 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—including independent insurance agencies—that organize as passthrough corporations, reducing their potential tax burden.
Across the country, the 20 percent deduction has helped small businesses, including qualifying insurance agencies, cultivate and continue to invest in their businesses over the past few years. The deduction has been especially helpful as small businesses faced the unprecedented economic challenges posed by the COVID pandemic.
As Congress seeks to identify resources that can be reallocated to help fund the Biden administration’s agenda, policymakers may seek to roll back or entirely repeal the passthrough tax deduction and use the funds to finance other policy priorities. PIA urges Congress to leave intact this vital tax benefit for small businesses. In fact, PIA played a key role in developing, and continues to champion, the Main Street Tax Certainty Act of 2021 (H.R. 1381/S. 480), which would make the 20 percent tax deduction for passthroughs permanent.
PIA will continue to work with Congress to protect this crucial tax deduction and will continue to advocate for it to be made permanent.