Tax talk

Final rules for applying the Tax Cuts and Jobs Act's Section 199A deduction have been released

In December 2017, Congress approved and President Trump signed into law the Tax Cuts and Jobs Act, the most sweeping reform of the tax code since 1986. While Congress was drafting and debating the legislation, NRCA educated lawmakers about how federal tax policy affects the roofing industry. One of NRCA's top priorities was reducing tax rates for all types of businesses, including corporations and businesses organized as pass-through entities.

NRCA has long advocated that maintaining a degree of parity in tax rates among varying business structures is crucial to the economy. In preparation for tax reform, NRCA became a steering committee member of the Parity for Main Street Employers, a coalition representing pass-through businesses. Together with the Parity for Main Street Employers, NRCA helped influence the debate within Congress regarding the complexities of tax policy concerning these types of businesses.

The efforts put forth by NRCA and the Parity for Main Street Employers led to an impressive win for the roofing industry. The Tax Cuts and Jobs Act reduces the corporate tax rate from 35 to 21 percent and provides a new 20 percent tax deduction for pass-through businesses under Section 199A that effectively lowers the top individual tax rate from 39.6 to 29.6 percent. Although the decrease in the corporate tax rate is straightforward, the Section 199A deduction for pass-through businesses is extremely complex. Its implementation required regulations determined by the IRS and Department of the Treasury to establish clear methods of calculating the deduction and clarifying what constitutes qualified business income.

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