$250,000 Income Tax Deduction For Small Business In Senate Finance Spotlight

A deduction that allows many small businesses to take the first quarter-million dollars of their income tax-free was cut back significantly in the House version of the budget. But Senators may not vote to keep that tax break.

Peter Lohmann runs a property management company in Columbus, employing 12 people. He said he got a big refund this year courtesy of the small business tax deduction for sole proprietorships, partnerships and LLCs – which his accountant had suggested not taking in the past, but then filed an adjustment for the last three tax years to include it.

“Were it not for this deduction, I would be paying essentially the same rate as a Fortune 500 company that was headquartered here in Ohio – actually, probably even a higher rate, because they would probably get all kinds of other deductions that we don’t have access to,” Lohmann said.

Lohmann isn’t pleased that the House has pulled that income threshold from the first $250,000 in income tax-free back to the first $100,000. It’s estimated that could bring in $193 million, and House leaders have said that’s money that can go to children’s initiatives, education and other investments.

Read more: https://www.statenews.org/post/250000-income-tax-deduction-small-business-senate-finance-spotlight