Farm and ranch owners are urging their Congressional delegations to support S. 1149, the Main Street Tax Certainty Act, sponsored by Senator Steve Daines, R-MT. This important legislation will make permanent the Section 199A qualified business income deduction, which is currently set to expire after 2025.
“Many farm and ranch families and other self-employed business owners should be interested in this bill as it has positive implications for retaining this helpful deduction,” said Cyndi Johnson, chair of the Montana Farm Bureau Federation Tax Committee. “We especially want to thank Senator Daines for his sponsorship of this important bill.”
The 199A deduction allows a business that operates as a sole proprietorship, partnership or S- corporation to take a tax deduction of up to 20 percent of qualified business income. With 98 percent of farms and ranches operating as pass-through businesses, the importance of this deduction to the agricultural sector cannot be overstated.
A look at the recent past shows the critical value of the Section 199A deduction. USDA’s Economic Research Service (ERS) estimates that had the deduction been available in 2016, almost half of farm households collectively would have been able to save $9.6 billion. Should the Section 199A deduction expire, it effectively will impose a huge tax increase on our nation’s farm and ranch businesses.
“Tax savings are critical to farm and ranch businesses which already operate on thin margins let alone having to deal with the uncertainty of markets and weather. The volatility of both of those factors have recently hit ag producers especially hard,” said Johnson. “Farm Bureau believes they should not have to deal with uncertainty caused by expiring tax deductions. In this environment of ambiguity, I know this deduction can provide at least a small token of assurance for the majority of rural American businesses. For this and all the reasons above, we support a permanent Section 199A deduction.”
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