Rep. Lloyd Smucker (R-Pa.) has reintroduced a bill in the House of Representatives seeking to make permanent a tax code amendment allowing for a 20% deduction of qualified income for pass-through businesses, a provision of the 2017 Tax Cuts and Jobs Act (TCJA) that is scheduled to expire at the end of this year without congressional action.
The “Main Street Tax Certainty Act” is also sponsored in the Senate by Sen. Steve Daines (R-Mont.), and Smucker says that the bill has the support of two-thirds of the House Republican Conference and all Republican members of the House Ways and Means Committee. The bill was previously introduced into the Ways and Means Committee in the summer of 2023 during the speakership of Former Rep. Kevin McCarthy (R-Calif.), but failed to progress beyond that point.
“This pro-growth policy will ensure small businesses maintain tax parity with larger corporations,” Smucker said in a statement. “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.”
Smucker reintroduced the bill into the House on Thursday, and received immediate support from a coalition of 235 individual business trade groups in a letter submitted to Smucker and Daines. Signatories include the Mortgage Bankers Association (MBA) and 39 other mortgage-oriented groups. The National Association of Realtors (NAR) and three other real estate trade groups also signed on to the same letter.
“Pass-through businesses are the backbone of the American economy. They account for 95% of all businesses and employ 63% of all private sector workers,” the letter said in part. “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.”
While the overwhelming majority of sponsors on the House version of the bill belong to the Republican Party, two Democrats are also signed on as co-sponsors: Reps. Henry Cuellar of Texas and Josh Gottenheimer of New Jersey. The Senate version of the bill has 37 co-sponsors — two-thirds of the Republican conference in the upper chamber — but is currently without Democratic support.
“It’s absolutely crucial that we pass this legislation to prevent a 20% tax increase for hardworking Montanans and I’ll keep fighting for ways to support Montana small businesses, which provide the majority of jobs in our state,” Daines said.
Both the congressman and senator cite an Aug. 2024 report from Ernst & Young as justification for their bills.
“The total US economic activity supported by the Section 199A deduction in 2024 is estimated to be 2.6 million workers earning $161 billion and generating $325 billion of GDP,” the report said. “The total economic activity supported by the Section 199A deduction – the economic footprint – consists of the economic activity at pass-through businesses directly supported by the deduction, as well as the related supplier activity and consumer spending.”
This is just one element of a major tax debate likely to play out this year in Congress. Last October at the MBA Annual Convention and Expo in Denver, MBA’s senior vice president of legislative and political affairs Bill Killmer described the impending debate as a “tax Super Bowl” which largely hinged on the November election’s results.
But the core provisions of the TCJA will not expire until the end of the year, and Congress has many other priorities to address before that point, which could push the substance of the tax debate further out.
In addition to pressing concerns abroad, Congress and the White House will need to come to an agreement on government funding by mid-March, and the narrow margins between the two political parties in Congress of recent years have made these negotiations fraught.
