This bill, known as the "Small Business Tax Cut Act," significantly increases the deduction for qualified business income (QBI) from 20 percent to 23 percent. This change is set to apply to taxable years beginning after December 31, 2026, aiming to provide enhanced tax relief for small businesses and eligible pass-through entities. The legislation also revises the application of limitations on the QBI deduction, particularly for taxpayers whose income falls below or exceeds certain thresholds, making the deduction more accessible by removing some restrictions for lower-income individuals. Furthermore, the bill expands the types of income eligible for the QBI deduction by including qualified BDC interest dividends received from electing business development companies. These dividends must originate from the net interest income of the company's qualified trade or business. To ensure the deduction remains relevant, the bill updates the inflation adjustment for threshold amounts, changing the base year from 2018 to 2025, thereby reflecting more current economic conditions.