If you run a business, you are probably interested in Section 199A, also sometimes called QBID (Qualified Business Income Deduction.)
Leaving the politics aside, the basic provision – with many, many interlocking conditions – is a deduction of as much as 20% of your net business income before the calculation of income tax. Thus, if you file Schedule C, own a rental property or farm, or you receive a K-1 from a partnership or sub-S corp, you might get a little excited.
But not too excited! The calculation is convoluted, and manages to limit the actual deduction in most cases. It is important that the owner be actively involved in the business, a condition that has only spurred additional questions which the IRS is still trying to answer. What is active? What’s a business?
Then, depending on your industry, there is an income phase-out which has generated even more questions.
Finally, self-employment tax does not enjoy this deduction.
It would be easy to write about this one for pages and pages – and many people already have. However, it is difficult to write about this one without getting into politics and/or opinions. So let’s just take it on a case by case basis and try not to raise our collective blood pressure.