Understanding the new Sec. 199A business income deduction
By Tony Nitti, CPA
With the enactment of legislation known as the Tax Cuts and Jobs Act (the Act)1 on Dec. 22, 2017, a new provision of the Internal Revenue Code was born: Sec. 199A, which permits owners of sole proprietorships, S corporations, or partnerships to deduct up to 20% of the income earned by the business. The motivation for the new deduction is clear: to allow these business owners to keep pace with the significant corporate tax cut also provided by the Act.