Danette O'Neal, PhD

The legislation is complex and with so much partisan back and forth, you’re probably wondering, ‘What does this mean for women business owners?’

WIPP’s advocacy team has been busy parsing the legislation and, while we aren’t accountants or tax attorneys, we are giving you our best interpretation of a complex bill that just passed Congress and is on its way to the president for his signature.

One of the most important changes to the bill, that was not in the House or Senate version, is inclusion of some service businesses in the pass-through carve out. There are two interpretations of how the provision will work:

1. The carve out is limited to 20% of $157,000 for single filers and $315,000 for joint filers; OR

2. Business owners with taxable income under $157,000 for single filers and $315,000 for joint filers will qualify for a 20% deduction. Any business income above that amount is subject to a determination of 50% of the business W-2 wages or 25% of wages + 2.5% of the cost of depreciated property. The adjusted amount would be eligible for a 20% deduction.

The legislative language and explanation is not clear and despite asking the tax writers, we still do not have a definitive answer. It should also be noted that service businesses are not eligible for the deduction if: “A specified service trade or business means any trade or business involving the performance of services in the fields of health, law, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners, or which involves the performance of services that consist of investing and investment management trading, or dealing in securities, partnership interests, or commodities.”