Tax Topic

Qualified Business Income (QBI)

Qualified Business Income came into existence with the 2017 Tax Cuts and Jobs Act, effective 1/1/18. It is meant to give, more or less, the same income tax advantage to sole proprietorships and pass-through business entities (LLCs, Partnerships, and S-Corps) that is enjoyed by big corporations. Although it becomes very complicated very quickly, the short version is that certain taxpayers may take as a deduction 20% of his/her/their total qualified business income. This means the taxpayer pays income tax on 80% of the qualified business income instead of the usual 100%. There are many rules and limitations, however. If you have business income and wish to discuss further, please let us know.

More information at IRS.gov: https://www.irs.gov/newsroom/qualified-business-income-deduction

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