Lawmakers propose to update tax break for performing artists

A bipartisan pair of House members introduced legislation Wednesday to adjust a tax deduction for actors, musicians and other types of performers to allow them to write off their work-related expenses.

Rep. Judy Chu, D-California, and Vern Buchanan, R-Florida, introduced the Performing Arts Tax Parity Act (PATPA) of 2023, which would update the existing Qualified Performing Artist Tax Deduction to enable working-class actors and performers to deduct such expenses once again after an earlier change in the tax law effectively ended that deduction for all but the poorest artists.

The Tax Cuts and Jobs Act of 2017 eliminated the ability to claim miscellaneous itemized deductions, which previously allowed artists to deduct their work expenses. The elimination of these deductions caused many artists to pay thousands more dollars in taxes, the lawmakers noted. 

The Performing Artist Tax Parity Act would fix this problem by updating the thresholds of the Qualified Performing Artists Deduction to allow more lower- and middle-income artists to claim it. Currently it’s only available to those making less than $16,000 a year. To better reflect today’s cost of living, the bill would increase the income ceiling to $100,000 for individuals and $200,000 for married joint filers and tie it to the automatic consumer price index for all urban consumers to ensure its future use.

Under current law, a qualified performing artist is defined as having:

• Performed services in the performing arts for, at minimum, two different employers during a taxable year;
• An amount of allowable deductions exceeding 10% of their gross income related to those services; and,
• An adjusted gross income of no more than $16,000. 

“In 2017, working-class performers and artists lost their ability to deduct common business expenses from their taxes. In an already demanding industry, paying for professional essentials like transportation, a talent agent, or equipment should not prevent entertainers from meeting their basic needs,” said Chu, who co-chairs the bipartisan Creative Rights Caucus, in a statement. “I am proud to once again join in a bipartisan effort with Congressman Buchanan to ensure that entertainment professionals get the tax relief they deserve through PATPA and can continue inspiring Americans across the country.”

Her home state of California naturally is where Hollywood is located, but also has many performers outside the movie and TV industry. The arts and culture sector in California was a $261 billion industry in 2021, representing 7.7% of the state’s GDP. The industry supports 742,432 jobs, or 4.1% of California’s workforce. Working performers in the entertainment and arts sectors are employees, not contractors, who accrue significant but necessary expenses to sustain employment, her office noted. Those expenses include ongoing training, travel for auditions, promotional material and talent agent commissions.

Florida, too, has many performing artists in the state. “The overwhelming majority of performing artists are lower-income and middle-class Americans struggling to make ends meet,” Buchanan said in a press release. “Congresswoman Chu and I are fighting to update this nearly 40-year-old law to deliver needed tax relief for performing artists in Southwest Florida and across the country. I know firsthand that our performing arts institutions and local talented performers are a tremendous asset in our community.”

The legislation has attracted support from some prominent labor unions in the entertainment industry, the Screen Actors Guild – American Federation of Television and Radio Artists and Actors’ Equity. 

“I thank Reps. Buchanan and Chu for the Performing Artist Tax Parity Act,” said SAG-AFTRA president and comedian Fran Drescher in a statement. “This bipartisan bill allows journeymen actors their legitimate business expenses and ensures their artistic contributions continue to enrich all of our lives each and every day.” 

Drescher starred as “The Nanny” in the 1990s sitcom and was elected president of the union in 2021.

The legislation arrived a day after the national deadline for filing individual income tax returns.

“Thousands of Equity members just filed their taxes, and again owed hundreds — sometimes thousands — of dollars more than before,” said Kate Shindle, president of Actors’ Equity Association, in a news release. “The overwhelming majority of arts professionals are middle-class workers who just can’t afford that. Fortunately, the Tax Code already recognizes the up-front business expenses of working in our industry; the problem is simply that the relevant income thresholds haven’t been revised since the Reagan administration. We are grateful for the leadership of Reps. Buchanan and Chu, and thank them for reintroducing this critical bipartisan legislation while we’re all still working toward a full recovery of the live performing arts.”