This bill makes permanent the tax deduction for qualified business income. (Under current law, the deduction expires after December 31, 2025.)

 Lloyd Smucker (R-PA) has re-introduced the Main Street Tax Certainty Act, H.R. 703, legislation that would permanently extend Section 199A of the Internal Revenue Code, which is slated to expire at the end of this year and should be part of a larger GOP tax package.

Qualified business income is defined as the net amount of qualified items of income, gain, deduction and loss with respect to any trade or business, excluding capital gains or losses, dividends, interest income, or income earned outside the U.S.

The 2017 Tax Cuts and Jobs Act created Section 199A of the Internal Revenue Code, which allows pass-through businesses to deduct up to 20 percent of qualifying income. Bill sponsors argues that by making this deduction permanent, this legislation ensures that millions of Main Street businesses continue to maintain tax parity with large corporations.

Pass-through businesses represent 98 percent of all businesses and employ approximately 50 percent of American workers. The “Main Street Tax Certainty Act” would help grow the economy and provide much needed certainty for small business job creators by making permanent the 20 percent pass-through deduction. Absent congressional action, these businesses will face a massive tax hike and will likely be forced to reduce wages or eliminate jobs.

“When small businesses thrive, our communities thrive. Small businesses need predictability and making Section 199A permanent will provide Main Street with the certainty they need to invest in their workforce, operations, and community. This pro-growth policy will ensure small businesses maintain tax parity with larger corporations. As Congress works with the Trump administration to renew expiring provisions of the Tax Cuts and Jobs Act, I will continue to fight for Section 199A and tax policies to support small businesses and families,” said Rep. Lloyd Smucker (R-PA). 

The deduction costs the federal government hundreds of billions of dollars in lost tax revenue over a decade. These tax cuts contribute to the federal deficit, requiring either spending cuts or tax increases elsewhere to compensate. Opponents argue that the deduction does little to stimulate real business investment or job creation. Unlike direct incentives for hiring or investing, this deduction rewards existing profits rather than encouraging new economic activity.