Mom and Pop Tax Relief Act

This bill changes the tax break for business income (the qualified business income deduction) to be simpler and more targeted. It caps the amount of business income that can count toward the deduction at $25,000, instead of using complex formulas. If your adjusted gross income is over $200,000 (or $400,000 for a joint return), the benefit is reduced. It also removes several complicated rules—like certain wage-based limits and some loss carryover rules—to make filing easier .

Key points:

• Who is affected: People with business income from a trade or business, not employees earning wages.
• What changes: Only up to $25,000 of business income can count toward this deduction, and the benefit goes down as income rises above $200,000/$400,000. Several technical limits and carryover rules are removed to simplify the deduction .
• When: Applies to tax years starting after December 31, 2025.