Contractors urge Congress to increase the 199A small business tax deduction
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Last summer, ACCA celebrated a big win as Congress made the Section 199A qualified business income deduction a permanent part of the tax code! This 20 percent tax deduction for businesses that are taxed as pass-through entities aims to provide parity with the 2017 tax cuts for larger businesses that are taxed at the corporate level. But last year’s bill stepped back from the House proposal to provide the 23 percent deduction necessary for true parity.
That’s why Rep. David Kustoff (R-TN) introduced the Small Business Tax Cut Act (H.R. 8415). It would increase Section 199A qualified business income deduction from 20 percent to 23 percent for eligible small businesses. The bill would also adjust the income thresholds and phase-out rules that determine deduction eligibility at higher income levels. For ACCA members running S corporations, partnerships, or sole proprietorships, those three percentage points translate directly into cash flow, hiring capacity, equipment investment, and long-term growth.
Contractors can take action to urge their representatives to support this common sense proposal. Spreading the news to other small businesses in their community can also help.
TAKE ACTION
Section 199A has been one of the most consequential federal tax provisions for HVACR contractors since the 2017 Tax Cuts and Jobs Act made it law. The deduction lets contractors keep more working capital in the business at a time when the industry is squeezed from every direction: rising labor costs, workforce shortages, climbing insurance premiums, expensive equipment, financing pressure, and a steady stream of new regulations.
Current budget talks in Congress are focused mostly on border security and immigration funding, but fast action could help bring tax cuts like this one into the conversation. ACCA’s 199A Tax Relief Action Alert gives you a fast way to tell your Representative why the Small Business Tax Cut Act deserves their support.
Posted In: Government, Taxes
