The 20% Pass‑Through (QBI) Deduction is Now Permanent

The Qualified Business Income (QBI) deduction, originally introduced under the Tax Cuts and Jobs Act of 2017, is now a permanent part of the tax code. This is great news for small business owners, freelancers, independent contractors, and anyone operating a pass-through entity like an S corporation, partnership, or sole proprietorship.

The QBI deduction is under Section 199A. Eligible business owners can deduct up to 20% of their qualified business income from their taxable income. This applies in addition to the standard or itemized deductions, providing a substantial tax benefit.

Key Highlights:

• Applies to sole proprietors, partnerships, S corps, and certain trusts and estates
• Up to a 20% deduction on qualified business income
• Helps lower your effective tax rate
• Now a permanent part of tax law—plan long term
• Subject to income thresholds and business type limitations

Tax Tip:

Structuring your business the right way, and paying yourself a reasonable wage if you’re an S corp, can help you maximize this deduction.

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Disclaimer: The information supplied is meant to serve as tools for personal and company use at your own discretion in conjunction with accountants, lawyers, or tax professionals.