Understanding Tax Reform's Impact On Pass-Through Income
By Elizabeth McGinley and Steven Lorch ( January 30, 2018, 11:49 AM EST) -- A key element of the Tax Cuts and Jobs Act, P.L. 115-97, is the reduction in the effective federal income tax rate on certain qualified business income (QBI) earned by individuals either directly or indirectly through pass-through entities, including partnerships and entities treated as partnerships for federal income tax purposes, such as LLCs and S corporations. This reduction is effected by two provisions of the TCJA: the decrease in the federal income tax rates applicable to individual taxpayers, with a new maximum rate of 37 percent, and the deduction of up to 20 percent of an individual taxpayer's QBI.[1] Both the individual rate decrease and the QBI deduction are scheduled to expire on Dec. 31, 2025....
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