Wednesday, December 5, 2018
Libin Zhang (Roberts & Holland, New York), Marginal Income Tax Rates of the Passthrough Business Deduction, 159 Tax Notes 1139 (May 21, 2018):
The law formerly known as the Tax Cuts and Jobs Act of 2017 created a 20% deduction for income from certain passthrough businesses. The deduction, under new section 199A, is broadly available for lower income taxpayers, but that greater availability is gradually phased out for higher income taxpayers who have certain businesses or other circumstances.
Simple numerical and calculus analyses show that the phaseouts may cause some taxpayers to experience marginal federal income tax rates of over 60%.