Main Street Tax Certainty Act

Bill Number

S. 213

Origin Chamber

Senate

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-01-23: Read twice and referred to the Committee on Finance.

Last Updated

2025-05-15T11:03:16Z

AI-Generated Summary

Purpose

The "Main Street Tax Certainty Act" (S. 213) aims to provide long-term tax relief and certainty for small businesses by making a temporary tax deduction permanent. Specifically, it targets the deduction for qualified business income (QBI), which allows eligible business owners to reduce their taxable income.

Key Provisions

• Amendment to the Internal Revenue Code (IRC): The bill modifies Section 199A of the IRC, which governs the QBI deduction.
• Removal of Expiration: It strikes (removes) subsection (i) of Section 199A, eliminating the provision that would end the deduction after December 31, 2025.
• Scope of the Deduction: The QBI deduction, originally created under the 2017 Tax Cuts and Jobs Act, allows owners of pass-through businesses (like sole proprietorships, partnerships, and S corporations) to deduct up to 20% of their qualified business income from their taxable income, subject to income limits and other rules.

Significant Changes to Existing Law

• From Temporary to Permanent: Prior to this bill, the QBI deduction was scheduled to expire at the end of 2025, reverting taxpayers to pre-2017 tax treatment. This change removes that sunset clause, ensuring the deduction continues indefinitely unless future legislation alters it.
• No Other Modifications: The bill does not change the deduction's rate, eligibility criteria, or limitations (e.g., phase-outs for high-income taxpayers or restrictions on certain service businesses like law or medicine).

Potential Impacts

• On Citizens and Businesses: Provides ongoing tax savings for millions of small business owners, potentially encouraging investment, hiring, and growth in "Main Street" enterprises (e.g., local shops, farms, and professional services). It reduces federal income tax liability without requiring structural business changes.
• On Government Agencies: The Internal Revenue Service (IRS) would continue administering the deduction as part of standard tax filings, avoiding the need for new guidance on its expiration. This could lead to sustained federal revenue losses estimated in the tens of billions annually (based on prior analyses of the deduction's cost).
• On International Relations: Minimal direct impact, as the bill focuses on domestic U.S. tax policy for pass-through entities, which are primarily U.S.-based.

Main Stakeholders Affected

• Small Business Owners: Primary beneficiaries, including owners of pass-through entities who rely on the deduction for tax planning.
• Taxpayers in General: Indirectly affects individual filers with business income, potentially lowering overall tax burdens for middle- and upper-middle-income groups.
• Federal Government and IRS: Must manage ongoing implementation and enforcement without the disruption of a deduction's end.
• Large Corporations: Less affected, as they typically use C corporation structures ineligible for QBI.

Notable Legal, Constitutional, or Political Implications

• Legal: Strengthens tax code stability by preventing automatic reversion, but could face challenges if viewed as increasing the federal deficit without offsets (under budget rules like the Byrd Rule in Congress). It aligns with the IRC's structure without raising separation-of-powers issues.
• Constitutional: No direct constitutional concerns, as Congress has broad authority over taxation under Article I.
• Political: Introduced with bipartisan co-sponsors (primarily Republicans), it signals support for pro-business tax policies amid debates over extending 2017 tax reforms. Passage could influence future tax legislation, especially with the 2025 expiration of other provisions looming, but may spark partisan divides over fiscal impacts.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Daines, Steve [R-MT]

Cosponsors (45)

Sen. Grassley, Chuck [R-IA], Sen. Cramer, Kevin [R-ND], Sen. Moran, Jerry [R-KS], Sen. Blackburn, Marsha [R-TN], Sen. Rounds, Mike [R-SD], Sen. Capito, Shelley Moore [R-WV], Sen. Ricketts, Pete [R-NE], Sen. Britt, Katie Boyd [R-AL], Sen. Risch, James E. [R-ID], Sen. Schmitt, Eric [R-MO], Sen. Wicker, Roger F. [R-MS], Sen. Lummis, Cynthia M. [R-WY], Sen. Hyde-Smith, Cindy [R-MS], Sen. Tuberville, Tommy [R-AL], Sen. Cruz, Ted [R-TX], Sen. Lankford, James [R-OK], Sen. Hoeven, John [R-ND], Sen. Tillis, Thomas [R-NC], Sen. Marshall, Roger [R-KS], Sen. Justice, James C. [R-WV], Sen. Sheehy, Tim [R-MT], Sen. Fischer, Deb [R-NE], Sen. Ernst, Joni [R-IA], Sen. Cassidy, Bill [R-LA], Sen. Thune, John [R-SD], Sen. Budd, Ted [R-NC], Sen. Scott, Rick [R-FL], Sen. Hagerty, Bill [R-TN], Sen. Barrasso, John [R-WY], Sen. Young, Todd [R-IN], Sen. Kennedy, John [R-LA], Sen. Scott, Tim [R-SC], Sen. Banks, Jim [R-IN], Sen. Cotton, Tom [R-AR], Sen. Curtis, John R. [R-UT], Sen. Sullivan, Dan [R-AK], Sen. Graham, Lindsey [R-SC], Sen. Boozman, John [R-AR], Sen. Moreno, Bernie [R-OH], Sen. Husted, Jon [R-OH], Sen. McCormick, David [R-PA], Sen. Lee, Mike [R-UT], Sen. Hawley, Josh [R-MO], Sen. Collins, Susan M. [R-ME], Sen. Cornyn, John [R-TX]

Recent Actions

• 2025-01-23: Read twice and referred to the Committee on Finance.
• 2025-01-23: Introduced in Senate

Bill Versions

• Main Street Tax Certainty Act — issued 2025-01-23 — PDF (2 pages)