The Small Business Tax Cut Act increases the tax deduction for qualified business income from 20 percent to 23 percent, allowing small business owners and self-employed individuals to reduce their taxable income by a larger amount. The bill also eases income limitations on who can claim this deduction by creating a phase-in structure for higher earners and expanding eligibility to include certain interest dividends from business development companies. These changes apply to taxable years beginning after December 31, 2026, meaning they would take effect for tax returns filed in 2027. The legislation does not specify additional federal spending or revenue impacts, as it primarily adjusts existing tax code provisions. The bill was introduced in April 2026 and referred to the House Ways and Means Committee.
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