What does Preamble of Small Business Tax Cut Act do?

This bill proposes to amend the Internal Revenue Code of 1986. The stated purpose is to increase the deduction for qualified business income.

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

This Act is formally titled the Small Business Tax Cut Act.

What does INCREASE IN DEDUCTION FOR QUALIFIED BUSINESS INCOME. of Small Business Tax Cut Act do?

This section amends section 199A of the Internal Revenue Code of 1986, increasing the deduction for qualified business income (QBI) from 20 percent to 23 percent. The modifications adjust limitations on the QBI deduction based on taxable income, introducing a threshold amount and a phase-in of limitations. Taxpayers whose taxable income does not exceed the threshold amount are generally exempt from limitations, and a specified service trade or business will not be disqualified solely by reason of subsection (d)(1)(A). For taxpayers exceeding the threshold amount, a limitation phase-in amount is calculated as 75 percent of the excess of taxable income over the threshold amount. The deduction for QBI is extended to include qualified BDC interest dividends, defining these as dividends from an electing business development company attributable to net interest income. Section 199A(e)(2)(B) is amended to modify the inflation adjustment, changing the reference year from 2018 to 2025. These amendments apply to taxable years beginning after December 31, 2026.

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Small Business Tax Cut Act

Last updated: 4/21/2026 · Introduced: 4/21/2026

Author: David Kustoff (R-TN)

TL;DR (AI)

The bill increases the qualified business income (QBI) deduction from 20% to 23% for eligible taxpayers.
It adjusts limitations on the QBI deduction based on taxable income, establishing a threshold amount and a phase-in system for those exceeding it.
The bill expands the QBI deduction to include qualified BDC interest dividends and updates the inflation adjustment reference year to 2025.

119th Congressin committeeHR. 1(Signed into Law)Official page

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Other Sections

Includes provisions on preamble, short title., and 1 more.

3 sections

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