HR110119th CongressWALLET

Small Business Prosperity Act of 2025

Sponsored By: Representative Biggs (AZ)

Introduced

Summary

Permanently expands the qualified business income (QBI) deduction. This bill would make a much larger QBI break for pass‑through owners, allow tax-free corporate form changes in many cases, and repeal the estate tax while keeping basis step-up for heirs.

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  • Small business owners and pass‑through taxpayers would see the QBI deduction replaced and enlarged from the old 20 percent to 43 percent, rising to 47 percent for tax years after December 31, 2025. The prior wage-based limits and the exclusion for specified service trades or businesses would be removed, and the change would apply for taxable years beginning after December 31, 2024.
  • Partners and S corporation shareholders would compute the deduction at the partner or shareholder level and take their pro rata shares of items into account. The bill also treats Puerto Rico income as part of the United States for QBI when that income is taxed under U.S. rules.
  • Corporations that change legal form would not trigger tax if owners, ownership shares, and assets stay essentially the same.
  • Estates of decedents dying after December 31, 2024 would no longer face the estate tax, while beneficiaries would still get a step‑up in basis on inherited property.

Bill Overview

Analyzed Economic Effects

3 provisions identified: 3 benefits, 0 costs, 0 mixed.

No federal estate tax after 2024

If enacted, estates of people who die after Dec. 31, 2024 would not owe the federal estate tax. The step‑up in basis at death would still apply. This would help heirs and estates of higher‑wealth households.

Bigger business income deduction for owners

If enacted, owners of pass‑through businesses would deduct 43% of their qualified business income. For tax years starting after Dec. 31, 2025, the rate would be 47%. Most businesses would qualify; only employee wages are excluded. Prior wage‑based and service‑business limits would be removed. Co‑op payment income would get only a 9% deduction. If all Puerto Rico business income is taxed under section 1, Puerto Rico would count as U.S. for this deduction. These changes would start for tax years that begin after Dec. 31, 2024, and the deduction would not expire.

No tax on certain corporate conversions

If enacted, changing a corporation into another business form would not trigger tax if nothing else changes. Owners must stay the same, their ownership shares must stay the same, and assets can change only by a tiny amount. This would apply to changes made after Dec. 31, 2024.

Sponsors & CoSponsors

Sponsor

Biggs (AZ)

AZ • R

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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