The American Society of Travel Advisors (ASTA) is applauding the advancement of important legislation impacting travel advisors' tax returns.
New legislation promoted by the House Ways and Means Committee this week would make the Section 199A tax deduction permanent at 23 percent.
The approved rate signals an increase from 20 percent, however, the deduction is currently set to expire at the end of 2025. So this passage is a significant victory.
Additionally, the tax reform package expands qualified expenses under 529 savings plans to cover postsecondary training and credentialing, including licenses and certifications. This includes ASTA's Verified Travel Advisor (VTA) program.
A recent survey of ASTA members who utilize the deduction found that a majority believe that it's at least moderately significant (21 percent) or very significant (66 percent) to reduce their overall tax liability. Plus, nearly 80 percent indicated that they would have to change their business practices in some way, by either reducing staff, increasing fees, reducing spending or retiring altogether, if the deduction expired.
One advisor who responded to ASTA's survey called it "a powerful tax benefit."
"The Section 199A deduction is the 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.”
"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," ASTA President and CEO Zane Kerby said in a letter to Congress earlier this month.
"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."
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