S.Amdt. 2778

This amendment, submitted by Mr. Wyden to bill H.R. 1, aims to change the rate of deduction for qualified business income under Section 199A.

The purpose is to replace the flat 20 percent deduction with a deduction percentage that changes based on the taxpayer's adjusted gross income.

• General Rule: The deduction starts at 30 percent, but is reduced (though not below 20 percent) by 1 percentage point for every $5,000 (or fraction) that adjusted gross income exceeds $150,000.
• Further Reductions: The percentage is further reduced by 1 percentage point for every $250,000 (or fraction) that adjusted gross income exceeds $50,000,000.
• Married Individuals Filing Separate Returns: These individuals have different thresholds, using $2,500 instead of $5,000, $75,000 instead of $150,000, $125,000 instead of $250,000, and $25,000,000 instead of $50,000,000.
• Inflation Adjustment: For taxable years starting after 2026, the dollar amounts in the general rule and for married individuals filing separate returns will be increased based on a cost-of-living adjustment.

These changes are set to apply to taxable years beginning after December 31, 2025.