Proposed regulations have been released on the new Section 199A (qualified business deduction) as part of the Tax Cuts & Jobs Act. This deduction will be available in the 2018 tax year for many sole proprietors, partnerships, trusts and S Corps and will allow for a 20% deduction on qualified business income. Learn more through the IRS website or by contacting our office.
IR-2018-162, Aug. 8, 2018
WASHINGTON — The Internal Revenue Service issued proposed regulations
today for a new provision allowing many owners of sole proprietorships,
partnerships, trusts and S corporations to deduct 20 percent of their
qualified business income.
The new deduction -- referred to as the Section 199A deduction or the
deduction for qualified business income -- was created by the Tax Cuts
and Jobs Act. The deduction is available for tax years beginning after
Dec. 31, 2017. Eligible taxpayers can claim it for the first time on the
2018 federal income tax return they file next year.
The deduction is generally available to eligible taxpayers whose 2018
taxable incomes fall below $315,000 for joint returns and $157,500 for
other taxpayers. It’s generally equal to the lesser of 20 percent of
their qualified business income plus 20 percent of their qualified real
estate investment trust dividends and qualified publicly traded
partnership income or 20 percent of taxable income minus net capital
Deductions for taxpayers above the $157,500/$315,000 taxable income
thresholds may be limited. Those limitations are fully described in the
Qualified business income includes domestic income from a trade or
business. Employee wages, capital gain, interest and dividend income are
In addition, Notice 2018-64,
also issued today, provides methods for calculating Form W-2 wages for
purposes of the limitations on this deduction. More information in the
form of FAQs on Section 199A can be found on IRS.gov.
Taxpayers may rely on the rules in these proposed regulations until final regulations are published in the Federal Register.
Written or electronic comments and requests for a public hearing on
this proposed regulation must be received within 45 days of publication
in the Federal Register