The Small Business Investor Tax Parity Act of 2025 would allow investors in Business Development Companies (BDCs) to claim the same tax deduction on their investment income that investors in Real Estate Investment Trusts (REITs) currently receive. Specifically, the bill modifies tax code section 199A to extend a 20 percent deduction to qualified interest dividends paid by BDCs, treating them identically to REIT dividends. BDCs are investment firms that provide financing and support to small and mid-sized businesses, and this change would affect individual investors who receive dividend income from these companies. The legislation would take effect for tax years beginning after December 31, 2026, giving BDCs and investors time to prepare for the changes.
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