Sponsors (193)
The bill permanently locks in a tax cut and planning certainty for pass-through business owners while increasing federal revenue costs and perpetuating fairness concerns between business owners and 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 taxes compared with repeal.
Affected small-business owners and their tax advisors gain greater certainty because the deduction is made permanent, simplifying tax planning and reducing uncertainty about post-2025 tax treatment.
All taxpayers face higher federal budget pressure because making the deduction permanent likely reduces federal revenue, which could increase deficits or force cuts to other programs or require offsets.
Wage earners and non–pass-through taxpayers may be disadvantaged because perpetuating the deduction preserves a tax preference that can favor pass-through owners over employees, raising fairness/equity concerns.
Based on analysis of 2 sections of legislative text.
Makes the qualified business income deduction permanent by removing its scheduled expiration, effective for tax years starting after Dec 31, 2025.
Makes the qualified business income deduction permanent by removing the scheduled expiration. The change takes effect for taxable years beginning after December 31, 2025, so the deduction continues indefinitely under current rules after that date. This is a narrow tax change: it does not alter who qualifies for the deduction or how it is calculated, only that the deduction will no longer sunset at the previously scheduled date. The change primarily affects owners of pass-through businesses and those who claim the qualified business income deduction on individual tax returns.
Introduced January 23, 2025 by Lloyd K. Smucker · Last progress January 23, 2025