Mom and Pop Tax Relief Act

The "Mom and Pop Tax Relief Act" significantly modifies the existing qualified business income (QBI) deduction under Section 199A of the Internal Revenue Code. Instead of a 20 percent deduction, the bill allows taxpayers to directly deduct their QBI, up to a maximum of $25,000 per taxable year. This change aims to simplify the calculation and potentially provide a more straightforward benefit for small businesses. A new adjusted gross income (AGI) limitation is introduced, which begins to reduce the deduction for taxpayers with an AGI exceeding $200,000 , or $400,000 for those filing a joint return. This ensures the deduction primarily benefits lower and middle-income business owners. The legislation also streamlines the QBI deduction by eliminating several complex provisions, including those related to W-2 wage limitations, unadjusted basis of qualified property, and the previous exclusion of specified service trades or businesses, making the deduction more accessible and easier to calculate for many small enterprises.