ASTA Supports Extension of Key Tax Provision for Small Business Owners

The American Society of Travel Advisors (ASTA) released a statement expressing their encouragement of legislation that was advanced by the House Ways and Means Committee on May 14 that would make the Section 199A tax deduction permanent at 23%.

(Section 199A, also known as the Qualified Business Income (QBI) deduction, provides a deduction for eligible self-employed individuals and small business owners who operate as pass-through entities.)

The tax reform package also expands qualified expenses under 529 savings plans to cover postsecondary training and credentialing, including licenses and certifications, including ASTA’s Verified Travel Advisor (VTA) program and certification from The Travel Institute.

“ASTA urges Congress to maintain these provisions as the reconciliation package moves through the legislative process,” the Association wrote.

A Recent Letter to the House Ways and Means Committee

In a recent letter that the Association sent to the committee, ASTA president and CEO Zane Kerby said:

“As independent contractors and self-employed individuals, roughly half of all travel advisors qualify for this deduction and utilize it to reduce their gross income. It has allowed for substantial tax savings for these members, many of whom are small business owners that count every penny. These tax savings have allowed them to further invest in their business and in the communities in which they live and work. Our members overwhelmingly reported in a recent survey that if the Section 199A deduction is allowed to expire, the increased tax burden would significantly impact their business. Some even informed us that it would affect their ability to employ staff or compete with other travel agencies and could affect the travel industry as a whole.”

Section 199A is a piece of the 2017 Tax Cuts and Jobs Act, a federal tax code that, as of 2017, allowed eligible businesses to deduct up to 20% of the QBI. Eligible businesses must be “pass-through” firms (sole proprietorships, S corporations, partnerships, and LLCs) who profits are taxed at the individual income tax rate of their owners.

“This is a powerful tax benefit,” Kerby wrote. “The Section 199A deduction is government’s way of giving qualified small business owners a significant tax break. It allows small businesses to reduce our taxes by thousands of dollars. Besides small businesses facing an increased tax burden, it would reduce the ability to reinvest into our business and job creation. We already operate on thin margins.”

The deduction is currently set to expire at the end of 2025.

 In a recent survey of ASTA members who have made use of this deduction, 87% reported that it was moderately significant (21%) or very significant (66%) to reduce their overall tax liability. Additionally, nearly 80% stated they would have to change their business practices in some way – reducing staff, increasing fees, reducing spending, or retiring altogether – if the deduction was not extended.

ASTA applauded the Ways and Means Committee for not only increasing this tax deduction, but also making it permanent in its reconciliation legislation and urged Congress to maintain this provision in the final version.

As part of the Tomorrow’s Workforce Coalition organized by the American Society of Association Executives (ASAE), ASTA supports the Freedom to Invest in Tomorrow’s Workforce Act (H.R. 1151/S. 756), which would provide valuable tax-advantaged resources to workers pursuing career advancement, career changes, or alternative career pathways. The legislation allows 529 plan beneficiaries to use their funds for further education such as obtaining and maintaining professional certifications, licenses, and credentials. The provisions of the legislation were included in the tax package advanced by the Committee.

“When consumers use an ASTA Verified Travel Advisor, they know they’re getting a travel advisor they can trust,” Kerby said. “ASTA invests heavily in education to ensure that every advisor who wants to build a strong, trusted business has the tools to do so. No other industry asks less of those entrusted with so much: people’s money, dreams, and safety. ASTA is committed to ensuring advisors understand the law, the regulatory landscape and their ethical obligations. We applaud Congress for proposing to allow travel advisors to invest their 529 funds in continuing education to take their small businesses to the next level.”