Sponsors (193)
The bill permanently extends a valuable tax break for pass-through business owners—reducing their taxes and clearing up future uncertainty—while increasing long‑term federal revenue costs and maintaining a tax preference that may be seen as unfair to wage earners.
Owners of pass-through businesses (S‑corporations, partnerships, and sole proprietorships) keep the §199A pass-through deduction permanently after 2025, lowering their taxable income and tax bills.
Small-business owners and pass-through taxpayers gain certainty for tax planning because the deduction will not expire after 2025.
All taxpayers could face higher federal deficits or reduced funding for other priorities because making the deduction permanent likely reduces federal revenue.
Wage earners and non–pass-through taxpayers may be disadvantaged because the permanent deduction continues a tax preference that can favor pass-through owners, raising equity and fairness concerns.
Based on analysis of 2 sections of legislative text.
Removes the expiration of the qualified business income deduction, making the passthrough 20% deduction permanent for tax years after 2025.
Official title: To amend the Internal Revenue Code of 1986 to make permanent the deduction for qualified business income.
Introduced January 23, 2025 by Lloyd K. Smucker · Last progress January 23, 2025
Makes the qualified business income (QBI) deduction permanent by removing the provision that would expire it. The change applies to taxable years beginning after December 31, 2025, so pass-through owners (sole proprietors, partnerships, S corporations, and some trusts/estates) can continue to claim the deduction after that date without a scheduled sunset.