House GOP backs 23% “pass-through” tax cuts for businesses

QBI deductions apply to so-called pass-through businesses. This reports the profit or loss of an individual tax return.

This includes partnerships and S Corporation, along with some trust and real estate. Sole owners such as freelance, contracts, gig economy workers are also eligible.

In 2025, tax deductions begin to be abolished when taxable income reaches $197,300 for a single filer or $394,600 for joint filings by married taxpayers. Deductions can be completely reduced or eliminated depending on the type of revenue and business (more details below).

According to IRS data, the latest available data, tax year 2022, saw approximately 25.6 million QBI deduction requests for the latest data, QBI deduction requests.

However, the deduction is controversial as “benefits flow to taxpayers with a large income.”

“These are not taxpayers who earn a salary by doing W-2 jobs,” she said. “They are business owners who receive business benefits on their individual tax returns.”

Currently known as a “specified trade or business of services” or SSTB, a particular white-collar expert (specific trade of services or business), such as a physician, lawyer, accountant, or financial advisor, known as a “specified trade of services or business,” you cannot claim a QBI deduction if your income exceeds a certain limit.

There are also non-SSTB companies’ revenue phase-outs, but that won’t go to zero.

The House bill changes phase-out calculations that could potentially provide a larger tax cut to certain SSTB owners, said Ben Henry Moreland, a registered agent for Ben Henry Moreland, a senior financial planning nerd at advisory platform Kitces.com, who analyzed the bill last week.

If enacted, a 23% deduction could provide “some (tax) benefits” to all income levels, but the gradual changes would primarily benefit high-income SSTB owners.

Chye-Ching Huang, executive director of the New York University Law Center for Law, said the QBI deduction change, which proposed a change to the QBI deduction, was “more generous and valuable to people in certain industries, including high-income people, especially those in certain industries, including lawyers and lobbyists.”