Tax Reform

Improving Tax Policy

IFA supports tax law changes that improve the opportunities for improves for franchisors, franchisees, and prospective investors to succeed. IFA frequently engages with Congress and Department of Treasury officials in addressing tax concerns facing franchise businesses. Most recently, IFA secured $8 billion in federal tax savings for franchise businesses each year as part of the Tax Cuts and Jobs Act, including

  • $2.5 billion in Pass-Through Tax Deductions for the nearly 2,000 franchisors and 200,000 franchisees that are pass-through entities
  • $3 billion in Continuation of State and Local Tax Deductions for more than 300,000 individual/married tax filers with direct franchise investments
  • $200 million in Professional Services Pass-Through Exemptions for 300 franchisors and 20,000 franchisees
  • $2 billion in Immediate Expensing of Equipment Purchase savings for more than 20,000 franchise locations across the country

Hundreds of IFA member franchisors and franchisees have pledged to reinvest their tax savings in their businesses, including improving employee benefits. IFA is also committed to addressing lingering tax concerns facing franchise businesses, including permanence of the individual income tax, depreciation rules, and lower pass-through rates. IFA also proudly advocates for tax credits to minority groups and veterans seeking to overcome the initial financial hurdles to owning and operating a franchise.

Recently, the U.S. House Committee chairs finalized their portions of the $3.5 Trillion spending package put forth by the House Democrats. At the center of the debate, the House Ways and Means Committee spent multiple days marking up a $2 trillion tax increase plan to help fund the larger $3.5 trillion spending package.

Amon other major provisions included in the bill was an increase in top capital gains tax rate from 20% to 25% including a separate 3.8% net investment income tax so the top rate would increase to 28.8%. As well as limitation on section 199A qualified business income and reduction of the foreign-derived intangible income incentive.

These provisions are major concerns to IFA. IFA sent a letter of opposition to Capitol Hill expressing our myriad problems with the reconciliation package (Build Back Better Act).