H.R.110 - Small Business Prosperity Act of 2025 (119th Congress)
Summary
H.R.110, the Small Business Prosperity Act of 2025, proposes significant amendments to the Internal Revenue Code of 1986, primarily focusing on expanding and making permanent the deduction for qualified business income (QBI). The bill aims to reduce the effective tax rate on QBI for small businesses and eliminate certain limitations and exclusions. It also includes provisions regarding corporate form changes and the repeal of the estate tax.
Expected Effects
If enacted, H.R.110 would lead to lower tax liabilities for many small business owners due to the expanded QBI deduction. The repeal of the estate tax would primarily benefit wealthier individuals and families. The change regarding corporate form is intended to simplify business restructuring.
Potential Benefits
- Increased after-tax income for small business owners, potentially leading to reinvestment and expansion.
- Simplified tax code for small businesses by removing limitations and exclusions related to QBI.
- Reduced tax burden on business owners who pass on their business to heirs, due to the repeal of the estate tax.
- Simplification of corporate restructuring by removing tax implications for changes in organizational form.
- Potential for increased economic activity due to greater investment by small businesses.
Most Benefited Areas:
Potential Disadvantages
- Increased federal budget deficit due to reduced tax revenue from small businesses and the elimination of the estate tax.
- Potential for tax avoidance strategies as a result of the simplified QBI deduction rules.
- Disproportionate benefit to higher-income small business owners compared to lower-income owners.
- Increased complexity for tax planning due to the changes in corporate form rules.
- Potential for reduced funding for public services due to decreased tax revenue.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's provisions related to taxation fall under the purview of Congress's power to lay and collect taxes, as outlined in Article I, Section 8, Clause 1 of the Constitution. The repeal of the estate tax could be debated in terms of its impact on wealth distribution and social equity, but the Constitution does not explicitly address these issues. The bill does not appear to infringe upon any individual rights or liberties guaranteed by the Constitution or its amendments.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).