Reducing the overall tax burden for America’s 3,000 independent beer distributors – with a focus on S corporations (pass-throughs), estate tax, increased business expensing allowances and preservation of LIFO accounting – is an ongoing priority for NBWA and its membership.
NBWA continues to advocate for Main Street businesses to receive tax treatment on par with Wall Street businesses to ensure that:
There are more than 4.5 million S corporations in the U.S., employing one in four private-sector workers. NBWA member companies are largely structured as S corporations, and their business income flows through to the owner’s individual income tax return.
The legislation that Congress passed in 2017 provides temporary improvements to S corporations by allowing a 20% deduction on taxable business income, while also providing significant relief for large corporations by permanently reducing the corporate tax rate from 35% to 21%.
The S corporation provision is structured to allow taxpayers that own businesses with qualifying income – below $157,500 for individuals or $315,000 for joint filers – to be eligible for the full 20% deduction. Beyond these thresholds, specific rules require privately-held businesses to distinguish between business income and individual wage income.
Despite establishing permanent relief for C corporations, the 2017 tax legislation provides reduced tax rates temporarily for S corporations only through 2025.
Will you support efforts to make tax relief for small, privately-held businesses permanent?
NBWA and its multi-generational family businesses have called on Congress for many years to address the burdens of the federal estate tax. The 2017 tax bill builds on prior progress that raised the exemption level to exclude all estates valued below $5 million indexed to inflation, with an exemption of $5.49 million in 2017. The new tax legislation provides further relief by temporarily doubling the exemption thresholds to slightly more than $11 million for individuals and $22 million for married couples through 2025.
Will you support future efforts to provide permanent estate tax relief to help family businesses plan for the future?
The 2017 tax reform bill included a broad array of provisions to stimulate productivity, including a temporary allowance for full and immediate expensing of qualifying purchases for a period of five years. The bill also maintained a beer distributor’s ability to use LIFO accounting. NBWA has been an advocate for expanded business expensing provisions and LIFO accounting preservation for many years.
NBWA urges Congress to maintain LIFO and make the expensing provision permanent.
Both S corporations and C corporations are subject to state and local income taxes on qualified business income. Under the new law, C corporations may continue to deduct their state and local taxes on their federal tax returns. For S corporations, however, only those businesses operating in states that impose taxes at the entity level will be permitted to take the same deduction. S corporations operating in states that impose the taxes at the individual shareholder level will be subject to the new $10,000 cap and can no longer deduct the total amount of the state and local taxes paid on their business income. Since most states tax S corporations (and other pass-through businesses) at the shareholder level, most pass-through businesses will no longer be able to fully deduct these business income taxes.
Congress should restore the ability of Main Street employers to fully deduct state and local income taxes, like C corporations are permitted to do.