“To amend the Internal Revenue Code of 1986 to expand the deduction for qualified business income, and for other purposes.”
No CRS summary available for this bill.
This section establishes the short title of the Act as the “Small Business Prosperity Act of 2025.”
This section makes the section 199A qualified business income deduction permanent by striking the sunset date in subsection (i), and it increases the deduction from 20 percent to 43 percent for taxable years beginning after December 31, 2024, and to 47 percent for taxable years beginning after December 31, 2025. As background, section 199A allows eligible pass-through business owners to deduct a portion of qualified business income from partnerships, S corporations, sole proprietorships, and certain cooperatives. This section also expands the deduction by repealing the wage-based limitation and the exclusion for specified service trades or businesses, so that the deduction applies to any trade or business other than services performed as an employee. It revises the cooperative deduction rules to provide a deduction equal to 9 percent of qualified business income properly allocable to qualified payments received from a cooperative, and it removes several related cross-references and special rules, including the limitation tied to W-2 wages and the separate treatment of wages in the Puerto Rico sourcing rule. (Thus, more business owners would be eligible for the deduction, and the deduction amount would no longer depend on W-2 wages or service-business status.) This section further revises the partnership and S corporation rules so that the deduction is determined at the partner or shareholder level, with each owner taking into account their allocable share of income, gain, deduction, and loss; for S corporations, the allocable share is the shareholder’s pro rata share. It also provides that, for taxpayers with qualified business income from sources within Puerto Rico that is fully taxable under section 1, the term United States includes Puerto Rico for purposes of determining qualified business income. The amendments apply to taxable years beginning after December 31, 2024.
This section provides that a change in a corporation’s organizational structure is not a taxable event under the Internal Revenue Code of 1986 if there is no change in the owners, their ownership interests, or the organization’s assets other than a de minimis change. It applies to organizational structure changes occurring after December 31, 2024.
This section repeals the Federal estate tax for estates of decedents dying after December 31, 2024 by repealing chapter 11 of the Internal Revenue Code of 1986. (Thus, estates of decedents dying on or after January 1, 2025 would no longer be subject to the estate tax under chapter 11.)