What is Qualified Business Income (QBI) primarily associated with?

Qualified Business Income (QBI) is primarily associated with a deduction for pass-through entities under the Tax Cuts and Jobs Act. This provision allows eligible taxpayers who own businesses structured as partnerships, S corporations, or sole proprietorships to deduct up to 20% of their QBI when calculating their taxable income.

The intention behind the QBI deduction is to provide a tax advantage to small businesses and their owners, aligning more closely with the benefits that C corporations might receive from the corporate tax rate. This deduction is particularly significant because it encourages investment and growth in these businesses by effectively reducing the overall tax burden on their earnings.

In this context, it's important to note that while corporations may benefit from lower tax rates, the QBI deduction specifically targets the income generated by pass-through entities, making this aspect distinctive to individual owners of such businesses. Therefore, the main focus of QBI is its relevance to individual tax returns and their business earnings rather than corporate taxation or rebates.