Below are the ongoing tax priorities for IFA and its members:

Section 199A

Created by the TCJA, Section 199A provides pass-through businesses with a 20% deduction for qualified business income. Unless later extended or made permanent, this 20% deduction will no longer be available after 2025. IFA supports The Main Street Tax Certainty Act (S. 213/H.R. 703) which makes this critical tax deduction permanent for small business owners across the country.

Read more about IFA’s involvement here.

Bonus Depreciation

This TCJA provision enables businesses to immediately write off 100% of the cost of eligible property acquired and placed in service after September 27, 2017, and before January 1, 2023. IFA supports the restoration of this provision to allow businesses to deduct their research and development expenses.

Expanding Interest Deductibility

Debt financing is important to franchise businesses in supporting capital investments, growth, and job creation across many business lines in franchising. TCJA introduced a limit on net interest expense to 30 percent of EBITDA (earnings before interest, taxes, depreciation, and amortization). IFA supports the Permanently Preserving America’s Investment in Manufacturing Act (S. 559/H.R. 1347), which would preserve this limitation and not subject franchise businesses with increased financing costs and reduced liquidity.to support capital investments, growth, and job creation.

Read more about IFA’s involvement here.

Work Opportunity Tax Credit (WOTC)

The WOTC is a federal tax credit available to employers for hiring and employing individuals from certain targeted groups who have faced significant barriers to employment. IFA supports the Improve and Enhance the Work Opportunity Tax Credit Act (S.492/H.R. 1177) which enhances the WOTC program. Key provisions include increasing the credit percentage from 40% to 50% of qualified wages and adding a second credit level for employees working 400 or more hours. Read IFA’s letter of support here.

Estate & Gift Tax Relief

IFA’s engagement in TCJA helped secure a permanent $5 million exemption, spousal transfer and stepped-up basis that was originally passed as part of the American Taxpayer Relief Act of 2012. IFA supports the Death Tax Repeal Act (S.1108/H.R. 7035) in an effort to continue to support repeal of estate taxes and secure permanence of TCJA estate tax provisions. The provision will expire with the TCJA in December 2025.

Read more about IFA’s involvement here.

Foreign-derived intangible income (FDII)

Reduces the deduction from 37.5% (current) to 21.875% in taxable years beginning after December 31, 2025. IFA opposes the reduction of this incentive, which encourages companies to keep research and development, production, ownership and commercialization of intellectual property (“IP”) and the associated jobs here in the United States. The FDII is critical to more than 250 U.S.-based franchise brands that have an international presence, and the possible elimination of the FDII incentive would discourage these businesses’ efforts to keep their innovation and IP development here in the United States.

Veteran Tax Credit

With the goal of alleviating barriers to entry in franchising, IFA proudly advocates for tax credits to minority groups and veterans seeking to overcome the initial financial hurdles to owning and operating a franchise. IFA supports the Veteran Entrepreneurs Act (H.R. 3214), which would provide a qualified veteran with a 25% tax credit on the initial franchise fee and significantly lighten the financial burden of starting their own business.