Caps Small Business Income Tax Deduction
HR3249-119 · Introduced May 7, 2025
Why it matters
Owners of small businesses with higher incomes would get a smaller deduction or none. Small business owners with lower incomes could see a larger deduction, starting in 2026.
What it does
- Caps the 199A business income deduction at $25,000 of qualified business income
- Reduces the deduction for taxpayers whose adjusted gross income is above $200,000, or $400,000 on joint returns
- Limits the deduction to businesses other than work done as an employee
- Applies to tax years beginning after December 31, 2025
In committee
Next: a committee vote
- Introduceddone
- Committeecurrent step
- Housenot yet
- Senatenot yet
- Presidentnot yet
About this bill
Would cap the business income tax deduction at $25,000 and cut it for people with incomes over $200,000, or $400,000 on joint returns. Changes would apply to tax years beginning after December 31, 2025.
Mom and Pop Tax Relief Act
Perspectives
💬 The case for
Small business groups would likely say the change helps owners of small businesses keep more income. They may also say it simplifies the deduction's rules.
💬 The case against
Some tax groups would likely say the change gives less to higher-income business owners. They may also say it adds complex rules to the deduction.
Sponsored by
Sponsor details for this federal bill are at the source link.
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