The Small Business Prosperity Act expands tax benefits for business owners by significantly increasing the deduction for qualified business income. Currently set to expire, the bill makes this deduction permanent and increases it from 20 percent to 43 percent (47 percent after 2025), effectively lowering the top tax rate on business income to 21 percent. The legislation also eliminates several restrictions, including wage-based limitations and exclusions for service businesses, making the deduction available to nearly all business owners. Additionally, the bill allows business owners to restructure their companies without triggering taxes and repeals the federal estate tax while preserving the "step-up in basis" for inherited assets. These changes take effect for tax years beginning after December 31, 2024, and primarily benefit self-employed individuals, small business owners, and partnerships and S-corporations.
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