Practitioners Cautiously Await Opening of New Tax Pro Account

Senate Finance Chair Proposes Bill to Overhaul Tax Break for Pass-Through Businesses

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.

Wyden introduces bill to overhaul pass-through deduction and expand to accountants

Proposed bill

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