Article Date:
January 2018

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Tax Reform: Will Section 199A Phase In or Phase Out Your 20 Percent Deduction?

New tax code Section 199A creates a totally uncomplicated 20 percent tax deduction for you on your qualified business income if you operate a proprietorship, partnership, or S corporation and you1



are married and file a joint tax return with $315,000 or less in taxable income, or


are single and file your tax return with $157,500 or less of taxable income.


Example. You operate a proprietorship, file as a single taxpayer with $135,000 of taxable income, and have qualified business income of $120,000. Your new 20 percent tax deduction is $24,000 ($120,000 x 20 percent).


Once your taxable income exceeds the threshold amounts above, you arrive in one of the four possible categories below:



Phase-in range for a non-specified service trade or business


Phaseout range for a specified service trade or business


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