New Tax Deduction Might Favor Life Agents Over Retirement Advisors

The details are hazy, and the final outcome is uncertain, but the Internal Revenue Service may make the new, 20% “pass-through deduction” more generous for insurance agents who sell products such as life insurance, disability insurance, voluntary benefits and property-casualty insurance than for financial professionals who classify themselves as “ wealth planners” or “retirement planners.”

IRS officials have raised that possibility in a new draft of proposed regulations for part of the new Tax Cuts and Jobs Act, the “qualified business  income” (QBI) deduction provision.

The QBI deduction part of the new tax act added Section 199A to the Internal Revenue Code (IRC).

IRC Section 199A creates a complicated 20% business income deduction for owners, or part owners, of the kinds of business that small business owners typically own: sole proprietorships, partnerships, S corporations, limited liability corporations and limited liability partnerships. (read more)