Day 6: Pass-Through Business Deduction Made Permanent—Great News for Small Business Owners
Welcome back to our series on the One Big Beautiful Bill Act (OBBBA).
Today, we’re focusing on small business owners and self-employed professionals: the OBBBA makes the 20% pass-through business deduction permanent. It’s a big win—but not without some limits.
What Changed?
Under the 2017 TCJA:
Business owners could deduct up to 20% of their qualified business income (QBI).
This deduction was scheduled to expire after 2025.
Under OBBBA:
The QBI deduction is now permanent.
Business owners can continue deducting up to 20% of eligible business income.
Applies to many sole proprietors, partnerships, LLCs, and S corporations.
Who Benefits?
Small business owners looking to reduce taxable income.
Freelancers, consultants, and gig workers who qualify for the deduction.
Entrepreneurs planning future business structures.
Who Should Still Be Cautious?
Certain “specified service trades or businesses” (like doctors, lawyers, accountants) may have limits if income exceeds certain thresholds.
High-income business owners need to check complex rules for qualifying income.
Not all business income qualifies—rental income or investment income may be excluded.
Why Tax Planning Matters Now More Than Ever
A permanent deduction sounds simple—but the rules are complex. Tax planning helps you:
Determine if your business income qualifies.
Evaluate business structures for the best tax outcome.
Avoid exceeding income thresholds that reduce or eliminate the deduction.
Optimize deductions to lower taxable income.
Tax planning ensures small business owners keep more of their hard-earned profits.
Are you a business owner wondering how to qualify for the pass-through deduction? Let’s build a tax plan that helps you save under the OBBBA. Schedule a discovery call for personalized tax planning services.
Up next: Day 7 – The Trade-Offs: Sunset Dates, Phase-Outs, and Debt
