PlainBillCongress, translated.Legislation. Context. Public interest.Referred to the House Committee on Ways and Means.
Congressional Research Service
No official summary is available in the imported record yet.
People & committees
Rep. Biggs, Andy [R-AZ-5] · R–AZ
Legislative record
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Referred to the House Committee on Ways and Means.
Introduced in House
Introduced in House
Primary sources
Text links open the official source. We also preserved the text version used in the PlainBill explanation below.
No related bills are listed in this snapshot. This does not establish whether the proposal has appeared in earlier Congresses.
Source last updated: Jan 31, 2025. Consult Congress.gov for the current record.
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PlainBill explanation
Based on the full Introduced in House · 2025-01-03 text. This explanation has not received human editorial review. This overview describes the proposal’s major provisions; it does not establish what its real-world effects would be.
The proposed Small Business Prosperity Act of 2025 would expand the deduction for qualifying business income, including income from service businesses but excluding work performed as an employee. It would also allow corporations to change their organizational structure without triggering tax when the owners and their ownership interests remain unchanged and assets change only by an insignificant amount, and repeal the federal estate tax. These are proposals in the supplied introduced text, not established changes to law.
This Act may be cited as the Small Business Prosperity Act of 2025.
Subsections (a)(2) and (b)(1)(B) of section 199A of such Code are each amended by striking 20 percent and inserting 43 percent (47 percent in the case of any taxable year beginning after December 31, 2025).
the term qualified trade or business means any trade or business other than the trade or business of performing services as an employee.
a change in the organizational structure of a corporation, however organized, into another organizational structure is not a taxable event for the purposes of such Code if there is no change among the owners, their ownership interests, or the assets of the organization (other than a de minimis change in such assets).
4. Repeal of estate tax and retention of basis step-up Effective for estates of decedents dying after December 31, 2024, chapter 11 of the Internal Revenue Code of 1986 is repealed.
Section 2 describes its goal as making the business-income deduction permanent and would delete section 199A(i) of the tax code. The supplied text does not reproduce that subsection or its existing expiration terms.
(a) Deduction made permanent Section 199A of the Internal Revenue Code of 1986 is amended by striking subsection (i).
The bill would replace 20 percent with 43 percent in two specified parts of the business-income deduction, rising to 47 percent for tax years beginning after December 31, 2025. These are deduction percentages. The heading states a goal of a 21 percent top tax rate, but the operative language changes the deduction rather than directly setting that tax rate.
(b) Deduction To achieve a top rate on qualified business income of 21 percent Subsections (a)(2) and (b)(1)(B) of section 199A of such Code are each amended by striking 20 percent and inserting 43 percent (47 percent in the case of any taxable year beginning after December 31, 2025).
The bill would replace the per-business deduction calculation with 43 percent of qualifying business income, increasing to 47 percent for tax years beginning after December 31, 2025. The heading describes this as removing a limit based on employee wages reported on W–2 forms.
(c) Repeal of limitation based on W–2 wages paid with respect to the trade or business, top rate on qualified business income Section 199A(b)(2) of such Code is amended to read as follows: (2) Determination of deductible amount for each trade or business The amount determined under this paragraph with respect to any qualified trade or business is 43 percent (47 percent in the case of any taxable year beginning after December 31, 2025) of the taxpayer’s qualified business income with respect to the qualified trade or business.
The bill would remove the exclusion for specified service businesses by defining a qualifying trade or business to include any trade or business except services performed as an employee. Employee work would remain excluded under this definition.
(d) Repeal of exclusion of specified service trades or businesses Section 199A(d) of such Code is amended to read as follows: (d) Qualified trade or business For purposes of this section, the term qualified trade or business means any trade or business other than the trade or business of performing services as an employee.
For a calculation involving cooperative payments, the bill would replace a “lesser of” comparison with 9 percent of qualifying business income attributable to qualifying payments from the cooperative. Because the surrounding tax-code provision is not supplied, the supplied amendment language does not establish the full effect on a taxpayer’s deduction.
by striking the lesser of— and all that follows in paragraph (4) (as so redesignated) and inserting 9 percent of so much of the qualified business income with respect to such trade or business as is properly allocable to qualified payments received from such cooperative.
For partnerships and S corporations, the deduction would be applied at the partner or shareholder level. Each partner or shareholder would account for their allocated share of qualifying income, gains, deductions and losses; an S corporation shareholder would use their proportional share.
In the case of a partnership or S corporation— (i) this section shall be applied at the partner or shareholder level, and (ii) each partner or shareholder shall take into account such person's allocable share of each qualified item of income, gain, deduction, and loss. For purposes of this subparagraph, in the case of an S corporation, an allocable share shall be the shareholder’s pro rata share of an item.
For taxpayers with qualifying business income from Puerto Rico, the bill would include Puerto Rico within “United States” when determining that income, but only if all that income is taxable under tax-code section 1 for the year.
In the case of any taxpayer with qualified business income from sources within the commonwealth of Puerto Rico, if all such income is taxable under section 1 for such taxable year, then for purposes of determining the qualified business income of such taxpayer for such taxable year, the term United States shall include the Commonwealth of Puerto Rico.
Section 2 also would delete several additional parts of section 199A and remove the words “and wages” from another provision. These are labeled conforming amendments—changes intended to align related provisions—but the deleted rules are not reproduced, so their separate effects cannot be fully explained from this bundle.
(e) Conforming amendments (1) Section 199A(b) of such Code is amended— (A) by striking paragraphs (3), (4), and (6), and redesignating paragraphs (5) and (7) as paragraphs (3) and (4), respectively
(2) Section 199A(e) of such Code is amended by striking paragraph (2).
(4) Section 199A(f)(4)(A) of such Code is amended by striking and wages. (5) Section 199A(g)(1) of such Code is amended by striking subparagraph (B) and redesignating subparagraph (C) as subparagraph (B). (6) Section 199A of such Code is amended by striking subsection (h).
The section 2 amendments would apply to tax years beginning after December 31, 2024, with the later increase to 47 percent applying to tax years beginning after December 31, 2025.
(f) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2024.
43 percent (47 percent in the case of any taxable year beginning after December 31, 2025)
Section 3 would prevent a corporation’s change of organizational structure from itself triggering federal tax, overriding conflicting tax-code provisions. Owners and their ownership interests would have to remain unchanged, and assets could change only by an insignificant amount. This rule would apply to structural changes occurring after December 31, 2024.
Notwithstanding any provision of the Internal Revenue Code of 1986, a change in the organizational structure of a corporation, however organized, into another organizational structure is not a taxable event for the purposes of such Code if there is no change among the owners, their ownership interests, or the assets of the organization (other than a de minimis change in such assets). The preceding sentence shall apply to changes in organizational structure occurring after December 31, 2024.
Section 4 would repeal tax-code chapter 11, identified by the heading as the estate tax, for estates of people dying after December 31, 2024. The heading also refers to retaining a “basis step-up,” but the operative sentence only repeals chapter 11 and does not reproduce the rules governing basis step-up. Its treatment cannot be independently established from the supplied statutory text.
4. Repeal of estate tax and retention of basis step-up Effective for estates of decedents dying after December 31, 2024, chapter 11 of the Internal Revenue Code of 1986 is repealed.
The official-actions snapshot updated January 31, 2025, records introduction in the House and referral to the House Committee on Ways and Means on January 3, 2025. It supplies no later legislative action.
Source snapshot updated 2025-01-31T16:16:35Z. 2025-01-03: Referred to the House Committee on Ways and Means. 2025-01-03: Introduced in House 2025-01-03: Introduced in House
A closer look
Reviewed version: Introduced in House · 2025-01-03. These findings describe provisions and who may benefit; they are not judgments of waste, corruption, or motive.
This review covers the supplied bill text. “None identified” does not rule out provisions in later versions or accompanying reports and disclosures.
Provisions outside the bill’s main subject, or policy changes attached to appropriations.
None identified in the reviewed text
No unrelated provision or policy change attached to appropriations was identified in the complete supplied introduced text, read as a package of tax changes. This conclusion is limited to that version and does not establish absence in other versions or accompanying materials, or any amendment attachment history.
Spending directed to particular recipients or places outside ordinary competitive or formula-based allocation.
None identified in the reviewed text
No congressionally directed spending for particular recipients or places was identified in the complete supplied introduced text. This conclusion is limited to that version and does not establish absence in other versions or accompanying materials. The source set does not establish formal earmark status through requests, disclosures or committee materials.
Narrow exceptions, exemptions, or preferential treatment that warrant a closer look.
None identified in the reviewed text
No materially narrow carve-out, special exemption or preferential treatment warranting a finding was identified in the complete supplied introduced text. Broad tax-policy coverage and equal access alone are not classified as targeted benefits. This conclusion is limited to that version and the statutory context supplied; it does not establish absence in other versions or accompanying materials.
Full text preserved for this analysis. Legislative record snapshot: Jan 31, 2025. How PlainBill uses AI