As we approach 2025, trillions of dollars in tax breaks are set to expire, including the qualified business income deduction (QBI) created under the Tax Cuts and Jobs Act of 2017. This deduction, worth up to 20% of eligible revenue, is crucial for self-employed filers and business owners who report income at the individual level through pass-through businesses.
At Extreme Investor Network, we understand the impact these tax breaks have on businesses and individuals. The QBI deduction was introduced to level the playing field between pass-through businesses and corporations by providing similar tax rates. However, while corporate taxes were permanently reduced, the QBI deduction is temporary and set to expire after 2025.
According to IRS data, there were approximately 25.9 million QBI claims in 2021, highlighting the significance of this deduction for privately held businesses. As we near the 2025 tax cliff, there are strong opinions about whether to extend the QBI deduction. Business advocates argue that it promotes growth, while critics point to its high cost and complexity.
At a estimated cost of over $700 billion over 10 years, the extension of the QBI deduction would be a significant investment. Some believe that the deduction primarily benefits the wealthy, but IRS data shows that millions of middle-income taxpayers also claim it.
As debate over the federal budget deficit continues, lawmakers are faced with the decision of whether to extend the QBI deduction beyond 2025. At Extreme Investor Network, we aim to provide valuable insights and expertise on personal finance topics like these to help our readers make informed decisions for their financial future. Stay tuned for more updates and analysis on the latest developments in personal finance.