How does the new Qualified Business Income Deduction impact you?
Replacing the Domestic Production Activity Deduction (DPAD), this new deduction allows individuals who meet the criteria to take an additional deduction of up to 20% of qualified business income. This includes trade or business income such as:
- Income reported on a Schedule C
- Pass-through ordinary income from an S-Corporation or Partnership on a Schedule E
- Some rental income reported on a Schedule E may qualify
The Qualified Business Income Deduction (QBID) generally applies to ordinary business income but excludes all forms of capital gains/losses, dividends, or interest income.
This deduction is limited or eliminated for taxpayers with taxable income exceeding $315,000 for married couples or $157,500 for all other filers.
Contact Lonny Hytrek and his team of tax professionals to schedule a tax planning appointment if you would like to discuss how this change will affect your tax situation!