This bill would change the tax deduction for qualified business income (QBI). It raises the QBI deduction rate from 20 percent to 23 percent. It adds “qualified BDC interest dividends” to the types of dividends treated like qualified REIT dividends for the deduction. The bill defines a qualified BDC interest dividend as a dividend from an electing business development company that is attributable to the company’s net interest income and allocable to a qualified trade or business. It changes how limits on the deduction are phased in when a taxpayer’s taxable income exceeds the law’s threshold by setting the “limitation phase-in amount” equal to 75 percent of the excess of taxable income over the threshold. The bill makes a conforming amendment by striking a paragraph in section 199A(d). It also updates an inflation-adjustment reference year (changing 2018 to 2025 and adjusting a calendar-year substitution). The changes apply to taxable years beginning after December 31, 2026.
No publicly available information about the bill’s expected effects on federal revenues, deficits, or other budgetary costs is included in the bill text.
No publicly available information in the bill text describing supporters’ stated reasons or expected benefits.
No publicly available information in the bill text describing opponents’ stated concerns or objections.