Main Street Tax Certainty Act makes key tax deduction permanent.

The Main Street Tax Certainty Act (S.1706/H.R.4721) would make permanent Section 199A, a key tax deduction that as of now will sunset at the end of 2025. Section 199A allows individual- and family-owned businesses organized as pass-throughs (S corporations, partnerships, and sole proprietorships) to take a 20% tax deduction on qualified business income.

Qualified business income is the net amount of qualified items of income, gain, deduction, and loss with respect to any trade or business, excluding capital gains or losses, dividends, interest income, or income earned outside the U.S.

More than 98% of AAPL’s membership is small businesses owned and operated by entrepreneurs. They rely on pass-through entities, including operating companies, funds, SPVs, and holding companies. Further, Section 199A’s REIT deduction has been paramount to capital formation for balance sheet lenders.

Business-purpose borrowers, private investors, and many ancillary professional and operational services also use Section 199A to maintain competitiveness. The sunset of this significant tax deduction will negatively impact not only those operating within our industry but also the worthy projects private lenders make possible: rehabilitation of our nation’s distressed housing stock, new construction, and community commercial development.

Making Section 199A a permanent part of the tax code will be a step toward much-needed stability at a time when our nation’s small businesses continue to navigate market disruption and cost volatility.

AAPL has submitted letters to the act’s sponsors, Sen. Steve Daines and Rep. Lloyd Smucker, to encourage passage of the bill.

Support 199A Today

1. Customize THE SAMPLE LETTER below

2.Submit it to:

Your Members in Congress

Bill Sponsors and co-sponsors

RE:  Letter in SUPPORT of H.R. 4721  –
Main Street Tax Certainty Act (Section 199A)

Dear Senator Daines and Representative Smucker:

We are writing you on behalf of the American Association of Private Lenders (“AAPL”), the nation’s largest and oldest trade association in the United States representing the interests of private lenders. Private lenders are small businesses that focus on providing financing to real estate investors and home builders.  More than 98% of AAPL’s membership of over 800 companies are small businesses owned and operated by entrepreneurs.

AAPL strongly supports the introduction of your Main Street Tax Certainty Act of 2023, legislation to make permanent the 20-percent deduction for small- and individually-owned businesses (Section 199A).

Your legislation would provide certainty to the millions of S corporations, partnerships and sole proprietorships that rely on the Section 199A deduction to remain competitive both here and overseas. Individually- and family-owned businesses organized as pass-throughs are the backbone of the American economy. They employ the majority of private-sector workers and represent 95% of all businesses. They also make up the economic and social foundation for countless communities nationwide.

Without these businesses and the jobs they provide, many communities would face a more uncertain future of lower growth, fewer jobs, and more boarded-up buildings. Despite this, Section 199A is scheduled to sunset at the end of 2025, even as the businesses it supports continue to recover from the COVID-19 pandemic and the price hikes, labor shortages, and supply chain disruptions that followed.

Making the Section 199A deduction permanent will help Main Street during this very difficult time, leading to higher economic growth and more employment. Separate studies by economists Barro and Furman, the American Action Forum, and DeBacker and Kasher found that making the pass-through deduction permanent would result in significantly improved parity and lower rates for Main Street businesses.

The more quickly Congress acts to make Section 199A permanent, the sooner Main Street businesses will benefit. We appreciate your introduction of this important legislation and look forward to seeing it enacted.

Sincerely, Eddie Wilson, Chairman, AAPL; Linda Hyde, President, AAPL;
Kevin Kim, AAPL General Counsel, Geraci LLP

AAPL will remain focused on this bill as it progresses. If you have any questions regarding this issue, please contact our general counsel,  Kevin Kim at
k.kim@geracillp.com.