Learning the ABCs of the QBI deduction for pass-through entities

Description

Abstract: The Tax Cuts and Jobs Act (TCJA) permanently lowers the federal income tax rate for C corporations to a flat 21%, starting in 2018. But manufacturers that operate as sole proprietorships and “pass-through” entities aren’t eligible for this reduced tax rate. Instead, they may be eligible for a “qualified business income” (QBI) deduction for 2018 through 2025. This article covers the basics of this special deduction. A sidebar explains why it’s important to meet with your tax advisor to review your choice of entity under the new law.