New Tax Rule On Pass-Through Businesses To Benefit Agency Owners
By Staff Reports
The Trump Administration finalized an IRS regulation making clear that owners and shareholders of insurance agencies and brokerages organized as pass-through entities can fully benefit from a new tax deduction.
The move pleased the Independent Insurance Agents & Brokers of America.
“Today the IRS released a final regulation implementing a new section of the tax code to create a deduction for owners and shareholders of certain pass-through businesses, including insurance agencies and brokerages,” said Bob Rusbuldt, Big “I” president & CEO.
“This regulation is a major and hard-fought win for Big ‘I’ members—the vast majority of which are organized as pass-through entities. Prior to the regulation being finalized there was uncertainty surrounding the application of the deduction to insurance businesses.”
Under the regulation, owners and shareholders of insurance agencies and brokerages can take up to a 20 percent tax deduction on qualified business income, no matter their taxable income levels, because the IRS does not consider insurance agents and brokers to be engaged in a “specified service trade or business.”
Owners and shareholders of “specified service trades and businesses” cannot take advantage of the deduction if their taxable income is over a certain level.
“Big ‘I’ members, whether organized as a pass-through entity or a C-corporation, can now rest assured that the tax reform law is working for them and their employees,” said Charles Symington, Big “I” senior vice president of external, industry & government affairs. “We thank Congress for its previous work on this landmark tax law and the Administration for working to finalize this regulation as quickly as possible.”