H.R. 8415

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8415 Introduced in House (IH)]

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119th CONGRESS
2d Session
H. R. 8415

To amend the Internal Revenue Code of 1986 to increase the deduction 
for qualified business income, and for other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

April 21, 2026

Mr. Kustoff (for himself, Mrs. Miller of West Virginia, Mr. Steube, Ms. 
Tenney, Mr. Carey, Mrs. Fischbach, and Mr. Moore of Utah) introduced 
the following bill; which was referred to the Committee on Ways and 
Means

_______________________________________________________________________

A BILL

To amend the Internal Revenue Code of 1986 to increase the deduction 
for qualified business income, and for other purposes.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Small Business Tax Cut Act''.

SEC. 2. INCREASE IN DEDUCTION FOR QUALIFIED BUSINESS INCOME.

(a) In General.--Subsections (a)(2), (b)(1)(B), and (b)(2)(A) of 
section 199A of the Internal Revenue Code of 1986 are each amended by 
striking ``20 percent'' and inserting ``23 percent''.
(b) Modification of Limitations Based on Taxable Income.--
(1) In general.--Section 199A(b)(3) of such Code is amended 
to read as follows:
``(3) Modification of determination of combined qualified 
business income amount based on taxable income.--
``(A) Exception from limitations.--In the case of 
any taxpayer whose taxable income for the taxable year 
does not exceed the threshold amount--
``(i) paragraph (2) shall be applied 
without regard to subparagraph (B), and
``(ii) a specified service trade or 
business shall not fail to be treated as a 
qualified trade or business solely by reason of 
subsection (d)(1)(A).
``(B) Phase-in of limitations.--In the case of any 
taxpayer whose taxable income for the taxable year 
exceeds the threshold amount, the sum described in 
paragraph (1)(A) (determined without regard to this 
subparagraph) shall instead be an amount (if greater) 
equal to the excess (if any) of--
``(i) the sum described in paragraph (1)(A) 
(determined by applying the rules of clauses 
(i) and (ii) of subparagraph (A)), over
``(ii) the limitation phase-in amount.
``(C) Limitation phase-in amount.--For purposes of 
subparagraph (B), the limitation phase-in amount shall 
be an amount equal to 75 percent of the excess (if any) 
of--
``(i) the taxable income of the taxpayer 
for the taxable year, over
``(ii) the threshold amount.''.
(2) Conforming amendment.--Section 199A(d) of such Code is 
amended by striking paragraph (3).
(c) Deduction for Qualified Business Income To Apply to Certain 
Interest Dividends of Qualified Business Development Companies.--
(1) In general.--Subsections (b)(1)(B) and (c)(1) of 
section 199A of such Code are each amended by inserting ``, 
qualified BDC interest dividends,'' after ``qualified REIT 
dividends''.
(2) Qualified bdc interest dividend defined.--Section 
199A(e) of such Code is amended by adding at the end the 
following new paragraph:
``(5) Qualified bdc interest dividend.--
``(A) In general.--The term `qualified BDC interest 
dividend' means any dividend from an electing business 
development company received during the taxable year 
which is attributable to net interest income of such 
company which is properly allocable to a qualified 
trade or business of such company.
``(B) Electing business development company.--For 
purposes of this paragraph, the term `electing business 
development company' means a business development 
company (as defined in section 2(a) of the Investment 
Company Act of 1940) which has an election in effect 
under section 851 to be treated as a regulated 
investment company.''.
(d) Modified Inflation Adjustment.--Section 199A(e)(2)(B) of such 
Code is amended--
(1) by striking ``2018'' and inserting ``2025'', and
(2) in clause (ii), by striking ``, determined by 
substituting `calendar year 2017' for `calendar year 2016' in 
subparagraph (A)(ii) thereof''.
(e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2026.
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