20 Percent Pass-Through Tax Deduction
Legislation has been introduced to make the 20 percent pass-through small business tax deduction permanent. Many individuals, including owners of businesses operated through sole proprietorships, partnerships, S corporations, trusts and estates may be eligible for a qualified business income deduction, also called the section 199A deduction. 

The legislation ensures that millions of Main Street businesses continue to maintain tax parity with large corporations. Section 199A, enacted as part of the 2017 Tax Cuts and Jobs Act, allows certain pass through businesses to deduct up to 20 percent of certain income.

The section 199A deduction is available to eligible taxpayers with qualified business income (QBI) from qualified trades or businesses operated as sole proprietorships or through partnerships, S corporations, trusts, or estates, as well as for qualified REIT dividends and income from publicly traded partnerships. The section 199A deduction is not available for C corporations.

“When Main Street thrives, America thrives,” said Congressman Smith (R-MO). “On behalf of the tens of millions of working class Americans employed by our country’s small businesses, I couldn’t be prouder to lead the charge to ensure this tax cut for small businesses is made permanent. These workers, who are the backbone of this country, can compete against anyone in the world when they are on a level playing field. My legislation ensures our tax code remains fair to Main Street businesses who power our economy.”

“Main Street businesses are the backbone of our economy, employing the majority of U.S. workers and representing 95 percent of all businesses,” said Congressman Henry Cuellar (D-TX). “This bipartisan legislation will ensure permanent tax relief for the millions of employers by making the 20 percent pass through deduction permanent. I am committed to delivering critical relief for our nation’s small businesses and the communities they serve.”

Should Congress make the 20 percent pass-through small business tax deduction permanent?