S.213 - Main Street Tax Certainty Act (119th Congress)
Summary
The Main Street Tax Certainty Act (S.213) proposes to make permanent the deduction for qualified business income (QBI) under Section 199A of the Internal Revenue Code of 1986. This deduction, originally introduced by the Tax Cuts and Jobs Act of 2017, allows eligible self-employed individuals and small business owners to deduct up to 20% of their qualified business income. The bill aims to provide long-term tax certainty for these businesses.
By eliminating the sunset provision in the existing law, the bill seeks to ensure that small businesses can continue to benefit from this tax deduction indefinitely. This is intended to encourage investment and growth within the small business sector.
The bill was introduced in the Senate on January 23, 2025, and referred to the Committee on Finance.
Expected Effects
If enacted, the Main Street Tax Certainty Act would make the QBI deduction a permanent feature of the tax code. This would primarily benefit small business owners and self-employed individuals by reducing their tax liability.
The change would also likely impact federal revenue, potentially increasing the national debt if not offset by other measures. The permanence of the deduction could also influence long-term business planning and investment decisions.
Potential Benefits
- Tax Certainty: Provides long-term tax planning for small businesses.
- Investment Incentive: Encourages business investment and expansion.
- Reduced Tax Burden: Lowers the tax liability for eligible business owners.
- Economic Growth: Potentially stimulates economic activity within the small business sector.
- Simpler Tax Filing: Simplifies tax calculations for those eligible for the deduction.
Most Benefited Areas:
Potential Disadvantages
- Increased National Debt: Could increase the national debt due to reduced tax revenue.
- Potential for Abuse: May create opportunities for tax avoidance or manipulation.
- Complexity: The QBI deduction rules can be complex, leading to compliance challenges.
- Disproportionate Benefit: The benefits may disproportionately favor higher-income business owners.
- Reduced Government Revenue: Could lead to reduced government revenue for public services.
Most Disadvantaged Areas:
Constitutional Alignment
The bill falls under the purview of Congress's power to lay and collect taxes, duties, imposts, and excises, as outlined in Article I, Section 8, Clause 1 of the Constitution. The bill does not appear to infringe upon any specific constitutional rights or protections.
The power to tax and spend is a broad one, and this bill represents a specific exercise of that power. There are no apparent constitutional conflicts.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).