Tax break for pass-throughs

Tax simplification? Maybe not. But the new tax provision for pass-through entities provides a generous deduction for businesses operating as S corporations, partnerships, or sole-proprietorships.

The new law allows a deduction equal to 20% of qualified business income from a partnership, S corporation, or sole-proprietorship. But, as with all tax laws, there are exceptions.

For taxpayers with taxable incomes below $157,500 for an individual filer, or $315,000 for a joint filer, there are no restrictions on the deduction, other than the income must be from a “trade or business,” and not disguised wages.