Qualified Business Income
About Qualified Business Income
The Qualified Business Income deduction, also known as Section 199A or the pass through deduction, was created by the Tax Cuts and Jobs Act of 2017. It allows owners of pass through businesses, including sole proprietorships, partnerships, LLCs, and S corporations, to deduct 20 percent of qualified business income. The deduction phases out for high income taxpayers in certain service businesses, including doctors, lawyers, and consultants. The QBI deduction was intended to give pass through businesses benefits similar to the corporate tax cut. The deduction is complex, with multiple limitations and calculations. The QBI deduction is scheduled to expire in 2026 along with other individual provisions of the TCJA. Making it permanent would cost approximately 700 billion over 10 years.
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