Before You Take the Pass-Through Deduction
What OBBBA Changed in §199A
1 CE · Federal Tax Update
For preparers with clients who have pass-through business income on a 2026 return: what P.L. 119-21 changed in §199A and what it left alone, the wider phase-in range, the new $400 minimum deduction, and what goes in the file to support it.
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About the course
Diane advises hospital systems on billing compliance. Consulting is a specified service trade or business, she and her husband file jointly, and their taxable income sits in the band where the deduction for a business like hers fades out. In 2026 that band is wider, so more of her practice counts.
Doug mows lawns. Every lawn, himself, evenings and weekends after his day job. His business is small enough that 20% of its income is pocket change, and in 2026 that changes too: a floor of $400 for owners who work in their businesses.
I picked these two because the same law helps them in different ways. Diane gains because the band got wider. Doug gains because there's now a floor. Most practices have clients like both, and the job is the same for each: rerun the numbers at the 2026 figures and keep the paper that backs them up. One hour of Federal Tax Update credit.
Learning objectives
By the end of this course, participants will be able to:
- Recall what P.L. 119-21 changed in §199A for 2026 and what it left alone.
- Identify how the wider phase-in range affects a 2026 deduction, for an SSTB and for a business that isn't one.
- Recognize when a client qualifies for the $400 minimum deduction.
- Identify what belongs in the file that supports a 2026 §199A deduction.
Syllabus
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SECTION 01What Stayed and What Went Away
A one-page refresher on the rate, the cap, the threshold and the phase-in range; then the end date P.L. 119-21 took away, and the planning built around it.
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SECTION 02The Wider Phase-In
Whether a 2026 client falls in the range, and why the regulation's figures are out of date; the wage-and-property reduction at the 2026 width; SSTB owners in the range, including clients who go from no deduction to some.
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SECTION 03The Minimum Deduction and the 2026 Return
Who has $1,000 of qualified business income from active businesses; how Form 8995 lines 15–18 apply the $400 minimum; which 2026 deductions lower taxable income for §199A; and what goes in the file if the return is examined.
