Rep. Kustoff Introduces Bill to Increase Small Business Tax Deduction to 23%
The Small Business Tax Cut Act is currently in the early stages of the legislative process. It was recently sent to the House Committee on Ways and Means for review. No further actions are scheduled at this time, and the bill is waiting for the committee to decide on its next steps.
The bill is sponsored only by Republicans and has not yet moved past the initial committee stage in a divided Congress.
Scores run from -100 (strongly harmful) to +100 (strongly beneficial) for each group, combining impact, certainty, scope, and duration ratings of 1-5. How impact scoring works
Independent contractors and gig workers who file as sole proprietors can claim the QBI deduction on their self-employment income. The bump to 23% would reduce their taxable income modestly. However, many gig workers earn below the income levels where this deduction makes a large dollar difference, so the practical benefit varies widely.
Referred to the House Committee on Ways and Means.
Introduced in House
The bill was officially filed and given a number. It now enters the legislative queue.
The National Federation of Independent Business is pressing Congress to pass the Small Business Tax Cut Act, which would increase the small business tax deduction from 20% to 23% and expand eligibility to claim the deduction for tens of millions of small businesses.
The Qualified Business Income deduction allows eligible business owners to deduct up to 23% of their qualified business income from taxable income, an increase from 20% starting in 2026. The deduction is available to owners of sole proprietorships, partnerships, and S corporations.
In addition to making the deduction permanent, recent legislation increased the Sec. 199A deduction to 23% beginning with tax year 2026. It also includes a new standard minimum deduction and increased small business expensing caps for software and equipment.
No votes recorded for this bill yet.
Document Type
Congressional Bill
Official Title
Small Business Tax Cut Act
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