The Main Street Tax Certainty Act

Securing the Future of Small Businesses in America

In a significant move to support America’s small businesses, Senator Steve Daines (R-MT), Majority Leader John Thune (R-SD), and 33 Republican Senators have introduced the Main Street Tax Certainty Act. This crucial legislation aims to make the 20% pass-through business tax deduction permanent, ensuring continued support for millions of small business owners across the nation1.

Understanding the Pass-Through Business Tax Deduction

The pass-through business tax deduction, also known as Section 199A, was introduced as part of the Tax Cuts and Jobs Act (TCJA) in 2017. This provision allows owners of pass-through entities—such as sole proprietorships, partnerships, S corporations, and certain LLCs—to deduct up to 20% of their qualified business income (QBI) from their taxable income2.

Pass-through businesses are named as such because their profits “pass through” to their owners’ individual income tax returns rather than being taxed at the corporate level. These types of businesses represent a significant portion of America’s economy due to approximately 90% of small businesses operate as pass-through entities5, and 99% of all U.S. businesses are small businesses.

The Section 199A deduction was designed to level the playing field between small businesses and large corporations. While corporate tax rates were reduced under TCJA from 35% to 21%, smaller pass-through entities were provided this deduction to ensure they could remain competitive,3

The Urgency of Making the Deduction Permanent

Currently, the pass-through business tax deduction is set to expire at the end of 2025, along with many other provisions of the Tax Cuts and Jobs Act1. This looming expiration date has created a sense of urgency among lawmakers and business advocates to ensure the deduction’s continuity.

The Main Street Tax Certainty Act, introduced in both the Senate and the House, seeks to address this issue by making the deduction permanent. Representative Lloyd Smucker (R-PA) in the House has introduced companion legislation, which has garnered impressive support with 153 co-sponsors.1

Economic Impact of the Deduction

The importance of this deduction cannot be overstated. According to an economic impact analysis conducted by Ernst & Young (EY), the Section 199A deduction currently supports:2.6 million jobs, $161 billion in employee compensation, and approximately $325 billion contribution to the GDP.5

Furthermore, making the deduction permanent could have even more significant long-term effects: Increase job equivalents at small businesses by about 1.2 million jobs annually for the first ten years, growing to 2.4 million jobs each year thereafter; and increase US GDP at small businesses by $75 billion annually over the first 10 years, growing to $150 billion annually thereafter.5

Advocacy Efforts

1. The National Association of Insurance and Financial Advisors (NAIFA) has advocated for the permanence of this deduction. NAIFA CEO Kevin Mayeux, CAE, emphasized the importance of preserving the pass-through business tax deduction, stating: “Preserving the pass-through business tax deduction is very important to NAIFA members, many of whom are small business owners and who serve the financial needs of other businesses in their communities. Encouraging tax measures that promote a strong economy and financial security is an important element of NAIFA’s 2025 advocacy agenda.”1NAIFA has taken several steps to support this legislation: Signing a letter to Senator Daines and Representative Smucker urging passage of the legislation.
2. Encouraging financial professionals to send their letters to lawmakers through NAIFA’s Advocacy Action Center.1
3. Joining over 140 trade associations in a letter lauding the introduction of the bill and urging Congressional support.2

Broad Support for the Legislation

The Main Street Tax Certainty Act has garnered support from various organizations beyond NAIFA. The National Federation of Independent Business (NFIB), the nation’s leading small business advocacy organization, strongly supports the legislation.5 Brad Close, NFIB President, stated: “If Congress fails to act, more than 30 million small businesses will face a massive tax hike at the end of this year. The 20% Small Business Deduction allows nine out of 10 Main Street job creators to compete, grow their business, hire new employees, raise wages, and give back to their communities.”5

Other organizations supporting the legislation include The National Association of Manufacturers
• The U.S. Chamber of Commerce
• Associated Builders and Contractors (ABC)3

The Importance of Tax Certainty for Small Businesses

1. Making the Section 199A deduction permanent is about maintaining a tax benefit and providing certainty and stability for small businesses. Tax certainty allows business owners to plan for the future, make long-term investments, and confidently grow their operations. Without this certainty, small businesses face several challenges: Difficulty in long-term planning and investment decisions.
2. Potential reduction in hiring and expansion.
3. Decreased competitiveness against larger corporations.
4. Increased financial stress and uncertainty.

Potential Consequences of Expiration

1. If Congress fails to act and the deduction expires, the consequences could be severe: Over 30 million small businesses could face a significant tax increase.5
2. Reduced job creation and potential job losses.
3. Decreased economic growth and investment.
4. Widened competitive gap between small businesses and large corporations.

The Path Forward

1. As the expiration date approaches, the Main Street Tax Certainty Act passage becomes increasingly critical. The bipartisan and bicameral support for this legislation demonstrates its importance to lawmakers on both sides of the aisle. Key points about the legislation: In the Senate, it has 36 original cosponsors, including the entire Senate Republican Leadership team.7
2. In the House, it has 151 original cosponsors, including all Republicans on the Ways & Means Committee.7
3. Over 235 trade associations have joined in supporting the legislation.7

Call to Action

1. For those who understand the importance of this legislation, there are several ways to support its passage: Contact your representatives: Use NAIFA’s Advocacy Action Center to send letters to your lawmakers urging them to support the Main Street Tax Certainty Ac.t1
2. Spread awareness: Share information about the importance of this legislation with your network and community.
3. Engage with local business organizations: Work with local chambers of commerce and business groups to amplify the message.

Conclusion

The Main Street Tax Certainty Act represents a critical opportunity for long-term stability and support for America’s small businesses. By making the Section 199A deduction permanent, this legislation would ensure that millions of pass-through businesses can continue to compete, grow, and contribute to the nation’s economic prosperity.

The urgency to pass this legislation grows as we approach the end of 2025. The potential consequences of inaction are too significant to ignore. It’s time for lawmakers, business owners, and concerned citizens to come together to support this vital measure.

The future of America’s small businesses—and, by extension, the health of our local communities and national economy—depends on providing the certainty and support that these enterprises need to thrive. The Main Street Tax Certainty Act is a crucial step toward securing that future.

References

1 NAIFA. (2025, January 24). Lawmakers Introduce the Main Street Tax Certainty Act. Retrieved from https://advocacy.naifa.org/news/senators-introduce-the-main-street-tax-certainty-act

2 NAIFA. (2023, May 18). NAIFA Supports Tax Certainty for Main Street. Retrieved from https://advocacy.naifa.org/news/naifa-supports-tax-certainty-for-main-street

3 Associated Builders and Contractors. (2023, May 18). ABC Supports Main Street Tax Certainty Act. Retrieved from https://www.abc.org/Politics-Policy/Letters-to-the-HIll/abc-supports-main-street-tax-certainty-act

4 NAIFA. (2023, July 19). NAIFA Supports the Main Street Tax Certainty Act. Retrieved from https://advocacy.naifa.org/news/naifa-supports-the-main-street-tax-certainty-act

5 National Federation of Independent Business. (2025, January 23). Small Businesses Praise Reintroduction of the Main Street Tax Certainty Act. Retrieved from https://www.nfib.com/news-article/small-businesses-praise-reintroduction-of-the-main-street-tax-certainty-act/

6 Main Street Employers Coalition. (2025, January 22). Letter to Senator Steve Daines and Representative Lloyd Smucker. Retrieved from https://www.mba.org/docs/default-source/advertising/199a-trades-letter-main-street-tax-certainty-act-2025—1-22-25.pdf

7 S-Corp. (2025, January 23). Main Street Tax Certainty in the House (and Senate). Retrieved from https://s-corp.org/2025/01/main-street-tax-certainty-in-the-house-and-senate/