Close Look at Pass-Through Tax Break Business Loves

Few of the provisions of the tax code this year have garnered as much attention from industry as the about-to-sunset pass-through deduction.

In their 2017 tax overhaul, Republicans allowed owners of pass-through businesses such as partnerships, S-corporations, and LLCs to deduct 20% of certain business income from their taxes. Businesses and their lobbyists say it gives those firms small and large parity with traditional corporations. Critics say its benefits largely flow to the wealthy.

That deduction—along with the rest of the individual provisions of that 2017 law known as the Tax Cuts and Jobs Act—expires at the end of 2025 absent congressional action and President Donald Trump's signature.

On this episode of Talking Tax, Bloomberg Tax reporter Zach Cohen spoke with two guests about what the deduction does and prospects for renewal by Congress this year. Jeff Brabant is a vice president of federal government relations at the National Federation of Independent Businesss, and Elena Spatoulas Patel is a nonresident senior fellow at the Urban-Brookings Tax Policy Center and the Sorenson Assistant Professor in the Division of Quantitative Analysis of Markets and Organizations at the University of Utah’s David Eccles School of Business.

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