Treasury Releases Regulations on Pass-Through Deduction (199A)

In August, Treasury and the Internal Revenue Service (IRS) released an important proposed regulation stemming from passage of the Tax Cuts and Jobs Act. The Act included a new deduction, Section 199A, which provided a 20 percent deduction off the qualified business income for most pass-through businesses, such as partnerships, S-Corporations, or LLCs, with certain restrictions. The deduction reduced the disparity between tax rates in the Act, where C-Corporations are now taxed at a 21 percent rate, while pass-through businesses are taxed at the individual rates, up to a top 37 percent marginal rate.

The proposed regulations answer many questions that AGC had about how the deduction will work in practice for many construction firms, and request comment on others; we are still evaluating. The proposed regulation allows for a 45 day comment period, and Treasury has scheduled a public hearing on October 16. AGC will be filing comments.

For more information, contact Matthew Turkstra at matt.turkstra@agc.org or (202) 547-4733.