By David Donnelly, CPA-Houston
The Small Business Tax Fairness Act proposed by Senator Ron Wyden (D-Ore.), chair of the Senate Finance Committee, includes several changes to the Section 199A qualified business income (QBI) deduction.
Of particular note are two proposed changes:
- The Act proposes to limit the QBI deduction to taxpayers whose income is less than $400,000, which will affect many of our clients.
- The Act proposes to expand the QBI deduction to most trades or businesses, including all professional trades or businesses.
- The current law excludes the QBID for ”a specified service trade or business.” This exclusion in the current law does not allow the QBID for income from the state-certified professions, except engineers and architects.
- The proposed Act removes this limitation, effectively allowing the QBID for all professions (including the practice of accounting), if the taxpayer’s income is less than the proposed $400,000 cap.
This is only proposed legislation and is far from becoming law. Although passage is uncertain, this does remove an arbitrary limitation from the current law.