Small Business Prosperity Act of 2025

This bill aims to lower taxes for many small business owners and make some tax rules simpler. It makes the small business “qualified business income” deduction permanent and much bigger. The deduction would jump from 20% to 43%, and then to 47% for years after 2025. It also removes limits tied to wages paid and ends the rule that blocked many service businesses from using the deduction. These changes would apply to tax years starting after December 31, 2024 .

The bill also says that if a company changes its legal form (for example, reorganizes) but the owners, their shares, and the assets stay the same, that change won’t trigger a tax. This applies to changes after December 31, 2024.

Finally, it ends the federal estate tax for people who die after December 31, 2024, while keeping the “step-up in basis” for inherited assets, which can reduce taxes when heirs later sell those assets.

• Who is affected: Owners of pass‑through businesses (including many service businesses), companies changing legal form without ownership changes, and families inheriting estates .
• What changes: Bigger and permanent small business deduction; removes wage-based limits and service-business ban; no tax on certain corporate form changes; estate tax repealed, step‑up kept .
• When: Most changes start for tax years after December 31, 2024; the higher 47% deduction rate applies for years after 2025; the estate tax repeal applies to deaths after December 31, 2024.