This bill extends a tax break to investors in Business Development Companies (BDCs) that matches the tax treatment already given to Real Estate Investment Trust (REIT) investors. Specifically, it allows individuals who receive dividend income from qualifying BDCs to use the Section 199A deduction, which lets them deduct up to 20 percent of their qualified business income from their taxes. The bill affects investors who receive "qualified BDC interest dividends"—dividend payments from BDCs that are derived from the company's net interest income from qualified business activities. The tax benefit would take effect for tax years beginning after December 31, 2026, creating parity between how BDC and REIT investors are taxed at the federal level.
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