What does Preamble of Small Business Tax Relief Act do?

This bill, formally titled 'To amend the Internal Revenue Code of 1986 to lower the corporate tax rate for small businesses and close the carried interest loophole, and for other purposes,' proposes amendments to the Internal Revenue Code of 1986. The bill aims to lower the corporate tax rate for small businesses. The bill also seeks to close the carried interest loophole.

What does SHORT TITLE. of Small Business Tax Relief Act do?

This bill is formally titled the Small Business Tax Relief Act.

What does GRADUATED CORPORATE TAX RATE TO SUPPORT SMALL BUSINESSES. of Small Business Tax Relief Act do?

This section amends Section 11(b) of the Internal Revenue Code of 1986 to establish a graduated corporate tax rate. For corporations with taxable income not exceeding $5,000,000, the tax rate is tiered. The first $400,000 of taxable income is taxed at 18%. Any taxable income exceeding $400,000 is taxed at 21% for these smaller corporations. Corporations with taxable income exceeding $5,000,000 are subject to a 21% tax rate. The amendment applies to taxable years ending after the enactment of this section.

What does PARTNERSHIP INTERESTS TRANSFERRED IN CONNECTION WITH of Small Business Tax Relief Act do?

This section amends section 83 of the Internal Revenue Code of 1986 regarding the election to include partnership interest in gross income. It redesignates paragraph (4) of existing subsection (c) as paragraph (5) and inserts a new paragraph (4) addressing partnership interests. The new paragraph (4) establishes rules for transfers of partnership interests in connection with the provision of services to a partnership. Under the new rules, the fair market value of the transferred interest is treated as the amount a partner would receive in a liquidation of the partnership. The recipient of the interest is treated as having made an election under subsection (b)(1) unless they specifically elect otherwise. The election under subparagraph (A)(ii) will follow rules similar to those in subsection (b)(2). The amendments apply to interests in partnerships transferred in taxable years ending after the date of enactment of this Act.

What does SPECIAL RULES FOR PARTNERS PROVIDING INVESTMENT MANAGEMENT of Small Business Tax Relief Act do?

This section amends the Internal Revenue Code of 1986 by adding a new section (710) addressing special rules for partners providing investment management services to partnerships. For investment services partnership interests, a portion of net capital gains will be treated as ordinary income, and a portion of net capital losses may be treated as ordinary losses, subject to limitations. Distributions of partnership property are treated as ordinary income to the extent of the increase in the partner's distributive share. Gains on the disposition of an investment services partnership interest are generally treated as ordinary income. The term 'investment services partnership interest' applies to interests acquired or held in connection with a trade or business primarily involving advising, managing, or arranging financing for assets. The amendments apply to taxable years ending after the date of enactment of this Act, with some exceptions for partnerships with taxable years including the enactment date.

What does ENHANCED DEDUCTION FOR CERTAIN SELF-EMPLOYED INDIVIDUALS. of Small Business Tax Relief Act do?

This section amends Section 164(f) of the Internal Revenue Code of 1986. The amendment provides an enhanced deduction for certain self-employed individuals. The enhanced deduction applies to individuals with an adjusted gross income of less than $400,000. For these individuals, the deduction calculation substitutes 'three quarters of the taxes imposed' for 'one-half of the taxes imposed'. The amendment applies to taxable years beginning after December 31, 2024.

What does INCREASED EXCISE TAX ON REPURCHASE OF CORPORATE STOCK. of Small Business Tax Relief Act do?

This section amends Section 4501(a) of the Internal Revenue Code of 1986. The amendment increases the excise tax on the repurchase of corporate stock from 1 percent to 1.5 percent. The amendment applies to repurchases of stock after December 31, 2024.

Back to bills

Small Business Tax Relief Act

Last updated: 5/8/2025 · Introduced: 5/8/2025

Author: Angie Craig (D-MN)

TL;DR (AI)

This bill establishes a graduated corporate tax rate, taxing the first $400,000 of a small business's taxable income at 18% and income exceeding that amount at 21%, while corporations with over $5,000,000 in income are taxed at 21%.
The bill modifies the taxation of partnership interests, specifically addressing transfers related to service provision and investment management, potentially treating gains as ordinary income.
Self-employed individuals with an adjusted gross income below $400,000 will receive an enhanced deduction for business expenses, calculated as three-quarters of their taxes imposed.

119th Congressin committeeHR. 2621(In Committee)Official page

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Includes provisions on preamble, short title., and 5 more.

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