H.R.3249 - Mom and Pop Tax Relief Act (119th Congress)
Summary
H.R.3249, the Mom and Pop Tax Relief Act, proposes amendments to the Internal Revenue Code of 1986, specifically targeting the qualified business income (QBI) deduction under Section 199A. The bill aims to simplify and modify the QBI deduction, particularly for small businesses. It sets a deduction for the first $25,000 of qualified business income and adjusts the adjusted gross income (AGI) limitation.
Expected Effects
The bill's passage would likely result in a simplified tax process for small businesses, potentially reducing their tax burden. This could free up capital for reinvestment and expansion. The changes to the AGI limitation could also impact which businesses are eligible for the deduction.
Potential Benefits
- Simplified Tax Filing: The bill simplifies the QBI deduction, making it easier for small businesses to calculate their taxes.
- Tax Relief for Small Businesses: By allowing a deduction for the first $25,000 of QBI, the bill provides direct tax relief to small businesses.
- Potential for Reinvestment: Reduced tax burden could allow small businesses to reinvest in their operations, leading to growth.
- Targeted Relief: The AGI limitation ensures that the tax relief is targeted towards smaller businesses and individuals.
- Reduced Complexity: Eliminating certain paragraphs and clauses in the existing code reduces complexity and potential confusion.
Most Benefited Areas:
Potential Disadvantages
- Potential for Abuse: Simplified rules could create opportunities for tax avoidance or manipulation.
- Revenue Impact: The tax relief provided could reduce government revenue, potentially impacting other programs.
- Complexity for Some: While simplifying some aspects, the changes might introduce new complexities for businesses with more intricate financial structures.
- Limited Scope: The $25,000 deduction may not be significant for all small businesses, especially those with higher incomes.
- Delayed Implementation: The effective date is set for taxable years beginning after December 31, 2025, delaying any immediate benefits.
Constitutional Alignment
The bill aligns with the constitutional principle of Congress's power to lay and collect taxes, as outlined in Article I, Section 8, Clause 1. The modifications to the tax code fall within the legislative authority granted to Congress. The bill does not appear to infringe upon any specific constitutional rights or protections.
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).