2.6 mllion jobs at risk as the tax break nears expiration
The Mortgage Bankers Association (MBA), along with a coalition of over 41 state and local mortgage associations and multiple trade organizations, has expressed support for the Main Street Tax Certainty Act of 2025.
The legislation, introduced by Senator Steve Daines and Representative Lloyd Smucker, aims to make permanent the 20% deduction for small- and family-owned businesses under Section 199A of the tax code.
In a joint letter addressed to the lawmakers, the groups emphasized the critical role of Section 199A in sustaining the competitiveness of small businesses. The letter highlighted that pass-through entities, such as S corporations, partnerships, and sole proprietorships, account for 95% of all US businesses and employ 63% of the private sector workforce.
"Pass-through businesses are the backbone of the American economy," the letter read. "They also form the economic and social foundation for thousands of communities nationwide. Absent their efforts, those communities would face a future of lower growth, fewer jobs, and more boarded up buildings."
The deduction, which was originally enacted under the 2017 Tax Cuts and Jobs Act, is scheduled to expire at the end of 2025.
The groups expressed concern that allowing this to happen would exacerbate challenges already facing small businesses, including inflation, labor shortages, and supply chain disruptions. Citing a report from Ernst & Young, the groups noted that the sunset of Section 199A could endanger 2.6 million jobs.
"Making the Section 199A deduction permanent will help Main Street compete with large public corporations, lead to higher economic growth and more employment, and help prevent a significant tax hike on the very businesses we rely on to drive our economy," the letter stated.
The groups also pointed to research by economists, including Barro and Furman, which suggests that extending the deduction could lead to higher levels of economic growth and improved parity for small businesses.
The coalition urged Congress to act swiftly, asserting that early passage of the legislation would enable small businesses to refocus on growth and job creation.
"The more quickly Congress acts to make Section 199A permanent, the sooner Main Street businesses can return their focus to economic growth and job creation," the letter read.
The proposed legislation has garnered broad support from organizations ranging from the US Chamber of Commerce to industry-specific associations such as the American Bankers Association and the National Federation of Independent Business.
What’s your take on the Main Street Tax Certainty Act? Share your thoughts in the comments.
