The Mom and Pop Tax Relief Act modifies the qualified business income (QBI) deduction, commonly known as the Section 199A deduction, which allows eligible business owners to deduct a portion of their business income from their taxes. Under this bill, the deduction would be capped at $25,000 of qualified business income per year, with the benefit phasing out for taxpayers whose adjusted gross income exceeds $200,000 ($400,000 for joint filers). The legislation simplifies the current rules by eliminating several complex limitations and wage-based restrictions that currently apply to the deduction, making it easier for small business owners to claim the benefit. The changes take effect for tax years beginning after December 31, 2025, and primarily benefit self-employed individuals and owners of small partnerships, S-corporations, and sole proprietorships who earn below the income thresholds.
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