Compare and Contrast: House vs. Senate Changes to the Section 199A QBI Deduction

The 20% qualified business income (QBI) deduction for pass-through entities is among the provisions that is set to expire after 2025.  Now, we have seen both the House and Senate's proposed changes--each of which would make Section 199A permanent.  The House draft would raise the current 20% QBI deduction to 23% and make it easier for specified service trades and businesses (SSTBs) to qualify.   Instead of phasing in the existing SSTB and wage and investment limitations over a fixed range of taxable income, the House would phase the limitations in at a fixed rate. For each dollar of taxable income over the threshold amount, a taxpayer’s deduction for QBI would be reduced by 75 cents until the SSTB and wage/investment limitations are fully phased in.  The Senate version did not contain the increase or the 75-cent phaseout.  Instead, it would increase the threshold phase-out ranges by increasing the $50,000 (non-joint returns) and $100,000 (joint returns) amounts to $75,000 and $150,000.  It would also create a new, inflation-adjusted, minimum deduction of $400 for taxpayers who have at least $1,000 of QBI from active trades or businesses in which they materially participate.  For more information on the existing 199A deduction, visit Tax Facts Online. Read More: Link to Q8932.