You write policies. You should not be writing checks to the IRS for shelter you forgot to take. Insurance is generally NOT an SSTB, so the full §199A QBI deduction is on the table when we plan it right.
Most independent agents file as a single-member LLC, never elect S-Corp, never open a Solo 401(k), and skip the §199A planning entirely. The good news: brokerage services for insurance are explicitly NOT an SSTB, so we keep the full 20% QBI deduction in play at almost any income level.
Insurance brokerage and agency commissions are not listed in the SSTB categories. Treas. Reg. §1.199A-5(b)(2)(x) carves out brokerage services as financial services only for securities brokers, not insurance. We document the activity, separate any RIA or investment-advisory sleeve, and preserve the full 20% deduction.
IRC §199A; Treas. Reg. §1.199A-5(b)(2)(x)A solo agent can defer $23,000 of W-2 wages (under S-Corp) plus another 25% of comp as employer profit sharing, up to the $69,000 cap for 2024. Roth and after-tax sleeves available. We design the plan, file the 5500-EZ at $250K, and stack it under a SEP for prior-year cleanup if needed.
IRC §401(k), §402(g), §415(c)State CE, pre-licensing, AHIP, NAHU, NAIFA dues, AAFCS designation, CLU, ChFC, CIC, CPCU. Per-state appointment fees, surplus lines stamping fees, NIPR transaction fees. All ordinary and necessary, deductible in the year paid. We track them by state for nonresident allocation.
IRC §162(a); Rev. Rul. 67-138Direct mail, internet leads (EverQuote, NextGen, SmartFinancial), Medicare lead lists, Facebook and Google ads, referral fees inside state regulations. Deductible ordinary expenses. Be careful with rebating-prohibition states; we structure incentives so the marketing deduction does not become a DOI violation.
IRC §162(a); state insurance code (anti-rebating)Errors and omissions premiums, surety bonds, cyber liability, and general liability are fully deductible business expenses. Owner disability is generally NOT deductible so benefits stay tax-free. Premium financing interest is deductible as business interest under §163(j) limits.
IRC §162(a); §104(a)(3); §163(j)Most independent agents qualify for a regular home office (exclusive and regular use, principal place of business). We run actual-expense or safe-harbor whichever wins. Multi-state appointments rarely create income-tax nexus on commissions, but residency, surplus lines, and DOI filings still matter. We map it.
IRC §280A(c)(1); Rev. Proc. 2013-13 (safe harbor)P&C agent, age 42, S-Corp, captive plus surplus lines book, $220K net commission income 2024. We opened a Solo 401(k), maximized profit-sharing on the S-Corp side, dialed in the home office, and preserved the full §199A deduction.
$16,000 savedFederal savings on $58K of Solo 401(k) deferral plus profit sharing, plus the recovered §199A deduction and home office allocation. State savings on top.