• Small Business Deduction

    Everything you need to know about line item 13 on the IRS Form 1040.

    Overview

The SBA (Small Business Administration) estimates Over 90% of businesses are structured as pass-through entities, including over 98% of businesses without employees and over 75% of small businesses with employees.

Highlights of the Small Business Deduction

Eligibility and Qualification Criteria

The small business deduction applies to sole proprietorships, partnerships, S-corporations, and certain entities, based on specific income thresholds and the nature of the business.

Calculation of the Deduction

The deduction calculation involves determining qualified business income, considering limitations based on income type and thresholds, and applying a percentage up to 20% of this income.

Impact & Benefits

This deduction significantly lowers taxable income for eligible small businesses, enhancing cash flow for reinvestment, growth, and operational flexibility.