Last week, Senator Steve Daines (R-Mont.) and Representative Lloyd Smucker (R-Pa.) introduced the Main Street Tax Certainty Act in the House and Senate, which would make the 20-percent Section 199A qualified small business income deduction permanent. Making this deduction permanent was identified by AGC members as the top priority for 2025, as it is set to expire at the end of the year. Notably, the legislation was cosponsored in the House by all Republican members of the Ways and Means Committee, and by Senate Majority Leader Thune (R-S.D.) in the Senate. In total, the legislation already has 155 cosponsors in the House, and 42 cosponsors in the Senate.
When the Tax Cuts and Jobs Act (TCJA) was passed in 2017, the legislation lowered the corporate rate from 35 percent to 21 percent but did not lower individual rates to match. To prevent a huge disparity between the tax rates paid by corporations and pass-through businesses, Congress created the 20-percent Section 199A qualified business income deduction. The vast majority of construction companies are organized as pass-through businesses, so making this deduction permanent is of paramount importance to the industry. Without this deduction, a business would face a 20 percent tax increase in 2026 and pay at a top marginal tax rate as high as 43 percent.
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