The "Main Street Tax Certainty Act" permanently extends the deduction for qualified business income for taxable years starting after December 31, 2025.
Lloyd Smucker
Representative
PA-11
The "Main Street Tax Certainty Act" amends the Internal Revenue Code of 1986 to permanently extend the deduction for qualified business income. This removes the previous expiration date, providing long-term tax certainty for eligible businesses. The change applies to taxable years beginning after December 31, 2025.
Main Street Tax Certainty Act Makes Business Income Deduction Permanent, Starting 2026
The "Main Street Tax Certainty Act" amends the Internal Revenue Code of 1986 to make the qualified business income (QBI) deduction permanent. The bill, introduced by Representative Lloyd Smucker, eliminates the current expiration date, ensuring the deduction continues for taxable years after December 31, 2025 (SEC. 2).
Tax Relief on Tap
The core change is simple: the QBI deduction, which currently allows eligible self-employed individuals, small business owners, and some landlords to deduct up to 20% of their qualified business income, will no longer have a sunset clause. This means no more worrying about whether this tax break will disappear in a few years. If you're running a small business, freelancing, or have income from a rental property, this could impact your bottom line.
Real-World Ripple Effects
For example, imagine a freelance graphic designer with a qualified business income of $60,000. Under the current law (and now, permanently), they could potentially deduct up to $12,000, reducing their taxable income. This bill locks in that potential benefit. Similarly, the owner of a small retail shop or a local contractor could see continued tax savings, freeing up cash for potential reinvestment or other expenses.
Potential Pitfalls & Long-Term Look
While the bill offers tax certainty, there are broader implications. Making the QBI deduction permanent could mean less revenue for the government over time. It is important to consider that this could have a downstream effect on funding for other programs. Also, the QBI deduction's rules can be complex. There are stipulations in Section 199A of the Internal Revenue Code that limit the deduction based on taxable income and the type of business. Some trades or businesses, like those in health, law, and accounting (above a certain income threshold), have specific rules that may limit the deduction. This complexity, now permanent, means individuals and businesses will need to stay informed. Finally, because there is no longer an expiration date, there won't be a built-in opportunity to review and tweak the deduction in the future to make sure it's working as intended.