Section 199A of the Internal Revenue Code


The International Institute of Building Enclosure Consultants (IIBEC) supports tax provisions, like Section 199A of the tax code, that promote equity between small, medium, and large companies while promoting job creation and economic growth.


Due to the different ways companies can be structured under the tax code, provisions designed to promote job creation and economic growth affect businesses differently. Congress included specific provisions in the 2017 tax reform package to ensure small and medium sized companies were also encouraged to create jobs and investments. Fittingly referred to as the Section 199A deduction as it is named after Section 199A of the Internal Revenue Code, this provision provides owners of sole proprietorships, partnerships, S corporations and some trusts and estates, a deduction of income from a qualified trade or business.

The deduction allows taxpayers to deduct up to 20 percent of their qualified business income. To ensure a focus on job creation and investment, Section 199A limits the deduction for larger pass-through businesses to those that have significant employment and investment levels.

Individually- and family-owned businesses organized as pass-throughs are the backbone of the US economy. These businesses employ the majority of private-sector workers and comprise 95 percent of all businesses.


Many IIBEC consultant members work in individually and family-owned firms that are eligible for the Section 199A deduction. Eliminating the deduction would place these businesses at a competitive disadvantage, restricting their ability to compete domestically and internationally.

IIBEC believes that as the nation emerges from a covid shutdown, adjusting one part of the tax code in a way that penalizes companies that are investing in jobs is an economically unhealthy trade-off for the nation.