How QBID Expiration in 2025 Could Impact Business Taxes
Understand the potential tax increase if the Qualified Business Income Deduction (QBID) expires and how to prepare.
What Is the Qualified Business Income Deduction (QBID)?
The Qualified Business Income Deduction (QBID) allows businesses to deduct up to 20% of their qualified income, reducing taxable income and overall tax liability. Introduced under the 2017 Tax Cuts and Jobs Act (TCJA), this deduction has benefited pass-through businesses such as LLCs, S corporations, and sole proprietorships.
However, unless Congress extends it, QBID is set to expire in 2025, leading to higher tax burdens for many businesses.
Potential Tax Increases If QBID Expires
Without QBID, businesses will lose this 20% deduction, significantly increasing their taxable income.
Example: Business with $3 Million in Net Taxable Income
- Current Tax Law (QBID Applies): Deducts 20%, reducing taxable income by $600,000.
- After QBID Expires: The full $3 million is taxed, increasing the business’s tax liability.
According to IRS tax brackets, this could result in a tax increase of up to 12% for high-income businesses.
What Scenarios Could Impact QBID’s Future?
The fate of QBID depends on upcoming elections and congressional tax policy decisions:
- Democratic-Controlled Congress: Higher tax rates and the expiration of QBID could increase taxes significantly.
- Republican-Controlled Congress: Likely to extend QBID or introduce new business tax breaks.
- Political Gridlock: If tax laws revert to pre-2017 policies, businesses could see an 11% increase in tax liabilities.
How to Prepare for QBID Expiration
With tax uncertainty ahead, businesses should take proactive steps to minimize tax liabilities before 2025:
- Accelerate Income Recognition: Take advantage of QBID before it expires.
- Consider Entity Restructuring: Explore forming an MSO (Management Services Organization) for tax efficiency.
- Maximize Business Deductions: Prepay expenses to reduce taxable income.
- Consult a Tax Expert: Work with Guardian Tax Consultants for strategic tax planning.
Key Takeaways
- QBID allows businesses to deduct 20% of their qualified income.
- If QBID expires, businesses could face a significant tax increase in 2025.
- Tax planning strategies like income acceleration and restructuring can help mitigate the impact.
Conclusion
As 2025 approaches, businesses must be proactive in tax planning. Whether or not QBID is extended, preparing now can help minimize tax burdens and maximize savings.
Need expert guidance? Contact Guardian Tax Consultants today.

- Qualified Business Income Deduction (QBID)
- 2025 tax changes
- Tax increase
- Net taxable income
- Business tax liability
- Taxable income
- Higher tax brackets
- Democratic sweep
- Republican sweep
- Gridlock sunset
- Tax deduction expiration
- 20% deduction
- Income phase-outs
- Pre-2017 tax laws
- $3 million net income
- Tax burden
- Income phase-out thresholds
- Tax bracket shift
- Tax planning
- 2025 expiration scenarios