Tax

Tax Issues

Tax deductions currently available to some independent insurance agencies organized as passthrough entities made permanent as part of One Big Beautiful Bill 

The 20 percent qualified business income (QBI) tax deduction available to eligible S Corporations has been made permanent! The 2017 tax reform law (P.L. 115-141) established a deduction of up to 20 percent for small business owners organized as S corporations, including many independent insurance agencies. Following its passage, PIA played a key role in confirming that qualifying insurance agencies were eligible for the available deductions for passthrough entities. The provision offered much-needed tax relief for qualifying owners of independent insurance agencies organized as passthrough corporations by enabling them to claim up to a 20 percent tax deduction.

Historically, passthroughs are taxed through their owners and do not qualify for corporate income tax benefits; their owners pay taxes on the business as though the business income is personal income. The passthrough deduction allows owners of qualified businesses to exclude up to 20 percent of their passthrough business income from federal income tax. The deduction is subject to several complex requirements, including the presence of “qualified business income,” a specific amount of qualified taxable income relative to the applicable threshold for each taxable year, and the business owner’s intent to file individually or jointly.

Unlike the C-corporation tax cuts also included in the 2017 package, which is permanent, the passthrough deduction was made temporary. PIA members with qualified pass-throughs would have lost the deduction at the end of 2025.


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