This bill lets people who receive certain interest dividends from business development companies (BDCs) use the same qualified business income deduction that already applies to some real estate investment trust (REIT) dividends. In simple terms, if you own shares in a BDC that meets the bill’s rules, a portion of the interest-based dividends you get could qualify for a tax deduction under section 199A of the tax code, similar to REIT dividends.

Key points:

• Who is affected: Investors who receive “qualified BDC interest dividends” from a BDC that has elected to be treated as a regulated investment company.
• What changes: These specific BDC interest dividends would become eligible for the same section 199A deduction treatment as qualified REIT dividends.
• When: Applies to tax years beginning after December 31, 2026.