As the leading advocacy association for insurance and financial services professionals, NAIFA continues to work with policymakers at the federal and state levels on efforts to bolster American businesses. Most recently, NAIFA is one of only three insurance-related associations (along with the Independent Insurance Agents and Brokers of America and the National Association of Professional Insurance Agents) to sign onto a letter sent to key members of the Senate and House of Representatives urging Congress to maintain the 20% deduction for qualified business income under Section 199A of the federal tax code.
In 2019, NAIFA worked with Treasury Department officials and was able to ensure a provision of the law excluding owners of businesses involved in “investing and investment management” from taking advantage of the deduction does not include life insurance agencies that receive less than 10% of revenues from investing and financial planning.
The letter, addressed to Senate Finance Committee Chair Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) and House Ways and Means Committee Chair Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX), explains that “Section 199A provides critical tax relief” to individually and family-owned businesses organized as pass-throughs, which are 95% of all business and “are the backbone of the economy.” Many of these employers have suffered economic harm during the COVID-19 pandemic.
“Proposals to limit or repeal the deduction would hurt Main Street businesses and result in fewer jobs, lower wages, and less economic growth in thousands of communities across the country,” the letter states. “Such changes would amount to a direct tax hike on America’s Main Street employers, a key reason why the tax plan released by the White House in March left the deduction fully intact.”
“NAIFA’s advocacy work on behalf of our members helped persuade the Treasury Department that businesses providing insurance services should be eligible, and this is reflected in Treasury’s final rule,” said NAIFA Senior Vice President of Government Relations Diane Boyle. “Unfortunately, NAIFA members who provide insurance services but receive more than 10% of their revenue from investment advice and financial planning services may not be eligible. We are now sharing with congressional leadership our strong opposition to any reductions or repeal of the 20% deduction for qualified business income under Section 199A, including phasing out the deduction above certain income thresholds.”
NAIFA also supports the Main Street Tax Certainty Act, which would make the Section 199A deduction permanent. Under current law, it is scheduled to expire in 2025.