Insurance industry responds to new qualified business income deduction
The qualified business income deduction is available in tax years beginning after Dec. 31, 2017.
On Jan. 18, 2019, the Treasury Department and the IRS issued final regulations and three related pieces of guidance, implementing the new qualified business income (QBI) deduction (section 199A deduction).
The new QBI deduction, created by the 2017 Tax Cuts and Jobs Act, allows owners of sole proprietorships, partnerships, S corporations, trusts or estates to deduct up to 20% of their qualified business income. Eligible taxpayers can also deduct up to 20% of their qualified real estate investment trust dividends and publicly traded partnership income.
The QBI deduction is available in tax years beginning after Dec. 31, 2017. Eligible taxpayers will be able to claim it for the first time on their 2018 Form 1040.
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Around the industry
The Council of Insurance Agents & Brokers and the Independent Insurance Agents & Brokers of America: “These regulations provide much needed certainty to insurance agencies and brokerages, and their employees. We thank the Administration for moving quickly to finalize these important regulations despite the partial government shutdown.”
The National Association of Professional Insurance Agents (PIA): “PIA was gratified to see that Treasury and the IRS recognize that the typical insurance agent is not engaged in ‘financial services’ in the way Congress described them, allowing agents the opportunity to take the 20% pass-through deduction. It’s a great day for small business insurance agencies, whose businesses will be taxed the way pass-through entities were intended to be by Congress.”