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Tax Law Change Impacting 26mill Businesses
The One Big Beautiful Bill Act, signed into law on 7/4/25, made the 20% QBI deduction for pass-through small businesses (sole props, S‑-corps, partnerships) permanent. It also increased the phase-in range for these pass-through taxpayers:
- Single filers:
Old range: $50,000
New range: $75,000 - Married filing jointly:
Old range: $100,000
New range: $150,000
The expanded phase-in ranges mean that higher-income taxpayers will have access to more of the Section 199A deduction before it phases out completely. This significantly benefits pass-through business owners with higher incomes, as they can now claim larger portions of the QBI deduction at income levels where they previously would have seen the deduction reduced or eliminated.
In 2021, 25.9 million small businesses claimed this QBI deduction.
What does this mean for me? Should I switch my tax election status from an S-corp to a pass-through LLC? It depends!! Every situation is different and requires a formal analysis of your business structure, income, and other deductions.
To discuss which structure is right for you, LLC or S-corp, click Book A Meeting.