Tax Warrior Chronicles

New 20% Qualified Business Income Deduction: An Intro to §199A

Posted on Wed, Feb 21, 2018

As part of the Tax Cuts & Job Act, passed on December 22, 2017, a new provision with significant planning opportunities was added to the tax law.  At its simplest level, the Qualified Business Income (QBI) deduction allows individuals a §199A deduction of up to 20% against income from passthrough businesses (partnerships, S corporations, and sole proprietorships) for tax years between 2018 and 2025. The deduction can have significant benefits, potentially decreasing the effective tax rate on business income from 37% to 29.6% for those in the top bracket.

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