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Balderson, Smucker Introduce Main Street Tax Certainty Act

Washington, D.C., July 28, 2023
  • IRS News
WASHINGTON D.C. – U.S. Representatives Troy Balderson (R-OH) and Lloyd Smucker (R-PA) introduced the Main Street Tax Certainty Act, H.R. 4721, which would support small and family businesses by permanently extending Section 199A of the Internal Revenue Code.

Section 199A, which was adopted as part of the landmark 2017 Tax Cuts and Jobs Act, allows for a 20 percent deduction of qualified income for pass-through businesses. Without this bill, this deduction will end in 2025. Most small businesses are structured as a pass-through and this section was included in the Tax Cuts and Jobs Act to promote equity in America’s tax code between small businesses on main street with larger corporations.

“The Tax Cuts and Jobs Act enacted sweeping reforms to our tax code and empowered small businesses across Ohio,” said Balderson. “It is critical that Congress make Section 199A permanent and prevent a massive tax hike on American small businesses.”

“Small businesses are the engine of America’s economy. The Tax Cuts and Jobs Act, in particular Section 199A, unleashed a robust economy where small businesses invested in their communities, creating more jobs and business opportunities. Providing permanency to this critical pro-growth tax policy will ensure small businesses continue to have tax parity with corporations and will strengthen main streets across the nation. I thank my colleagues for supporting the Main Street Tax Certainty Act and will continue to fight for its passage,” said Smucker.

The Main Street Tax Certainty Act is supported by over 160 organizations, including the National Federation of Independent Businesses, the National Association of Manufacturers, Associated Builders and Contractors, the American Farm Bureau Federation, and the U.S. Chamber of Commerce. Click here to read a letter of support from these organizations.  

“Passing the Main Street Tax Certainty Act would stop an enormous tax increase currently scheduled to strike small businesses at the end of 2025,” said Brad Close, NFIB President. “The 20 percent Small Business Deduction is set to expire in 2025, and without it, small businesses will have to limit their plans to grow, invest, and hire. By making the deduction permanent, small business owners will have the tax certainty they need to make business decisions about their future. We are encouraged that this important legislation has been introduced in both the House and the Senate and urge Congress to consider it.”

“Small and medium manufacturers, often organized as pass-through entities, are the backbone of the American supply chain. Section 199A allows pass-throughs to deduct 20 percent of their qualified business income, enhancing the ability of small firms to reinvest in their businesses and their workers and increasing the resilience of manufacturers in America. Unfortunately, Section 199A is scheduled to be eliminated at the end of 2025. The NAM applauds the reintroduction of the Main Street Tax Certainty Act, which will make permanent this crucial tax provision for small businesses as they continue to lead our economic recovery,” said Chris Netram, Managing Vice President of Policy for the National Association of Manufacturers.

This legislation is co-sponsored by 92 Members of Congress.

Background:

Section 199A allows up to a 20 percent pass-through income deduction for small businesses organized as sole proprietorships, partnerships, S corporations, trusts, or estates, or income from qualified REIT dividends and income from publicly traded partnerships.

A recent study from the S Corporation Association, which represents individual and family-owned businesses, reports that tax parity between small businesses organized as pass-through entities and corporations will end if Section 199A ceases to exist. Additionally, another report from the S Corporation Association indicates “private companies organized as pass-through businesses employ 58 percent of all private sector workers.”

U.S. Senator Steve Daines (R-MT) introduced companion legislation in the United States Senate, which has 18 co-sponsors.
 
 
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