“To amend the Internal Revenue Code of 1986 to modify the qualified business income deduction.”
No CRS summary available for this bill.
This section revises the qualified business income (QBI) deduction under Section 199A of the Internal Revenue Code—currently up to 20% of QBI from pass-through businesses (e.g., sole proprietorships, partnerships, S corporations), subject to wage and capital limitations—to instead allow a deduction equal to the lesser of the taxpayer's total QBI or $25,000, with conforming amendments striking the 20% calculation and wage/capital limits. It further limits the deduction by reducing it (but not below zero) for adjusted gross income exceeding $200,000 ($400,000 for joint returns). The section also simplifies the deduction by (1) eliminating specified service trade or business restrictions, (2) removing QBI loss carryover rules, (3) broadening the definition of qualified trade or business to exclude only employee services, and (4) making additional conforming amendments to wage definitions, taxable income computations, and short-year rules. The changes apply to taxable years beginning after December 31, 2025.