The 20% QBI Deduction Is Now Permanent: Section 199A After 2025
Part of our 2025 Tax Law Changes guide — the complete breakdown of the One Big Beautiful Bill Act.
The Section 199A qualified business income (QBI) deduction — the 20% deduction for owners of pass-through businesses — was one of the 2017 provisions scheduled to sunset after 2025. The 2025 One Big Beautiful Bill Act made it permanent, removing a major source of planning uncertainty for the tens of millions of pass-through owners in the country.
What stayed the same
The core structure is intact: a deduction of up to 20% of qualified business income, subject to the taxable-income thresholds, the specified-service-trade-or-business (SSTB) limits, and the W-2 wage and UBIA-of-qualified-property tests above the thresholds.
What to watch
- The phase-in ranges were adjusted; confirm the current threshold bands.
- The SSTB rules still disallow or limit the deduction for many service businesses at higher incomes.
- Aggregation elections and the rental real estate safe harbor remain important planning levers.
Why permanence matters
With the deduction no longer sunsetting, choice-of-entity analysis stabilizes. The recurring question — “will 199A even exist next year?” — is off the table, so S-corporation reasonable-compensation planning, wage optimization, and entity structuring can be modeled on firmer ground. Revisit clients who structured around the expected expiration.
This article is educational and current as of its publication date. Federal tax provisions — dollar thresholds, phase-outs, and effective dates — change frequently and many items here are temporary. Confirm the current statute, IRS guidance, and your client’s facts before relying on any point below. Not legal or tax advice.
