More than 230 trade associations signed a letter sent to U.S. Senator Steve Danes (R-MT) and Representative Lloyd Smucker (R-PA) in support of their legislation to make the Section 199A deduction permanent. 

The letter, led by Main Street Employers Coalition, says small and family-owned businesses rely on the 20% deduction to remain competitive. 

“Pass-through businesses are the backbone of the American economy,” the letter says. “They account for 95% of all businesses and employ 63% of all private sector workers. They also form the economic and social foundation for thousands of communities nationwide. Absent their efforts, those communities would face a future of lower growth, fewer jobs, and more boarded-up buildings.” 

Danes and Smucker are expected to file legislation Thursday, which would make the deduction permanent, according to an S Corp newsletter. The deduction is scheduled to sunset at the end of 2025. 

A 2024 EY study found the loss of Section 199A would put 2.6 million jobs at risk, the letter says. It adds the sunsetting of the deduction would be an additional burden for businesses already struggling with rising prices, labor shortages and supply chain disruptions. 

“Making the Section 199A deduction permanent will help Main Street compete with large public corporations, lead to higher economic growth and more employment, and help prevent a significant tax hike on the very businesses we rely on to drive our economy,” according to the letter. “Numerous studies by economists Barro and Furman, the American Action Forum, DeBacker and Kasher, EY and others found Section 199A permanence would result in improved parity for Main Street businesses and higher levels of economic growth.” 

The deduction of qualified business income is used by about 9 out of 10 Main Street businesses nationwide, according to NFIB. NFIB President Brad Close wrote in an op-ed for the Wall Street Journal that the Main Street Tax Certainty Act would ensure small businesses can grow and thrive.

The letter was signed by the Society of Collision Repair Specialists, multiple state Auto Body Associations and the National Small Business Association. 

IMAGES

Photo courtesy of uschools/iStock