The Tax Cuts and Jobs Act (TCJA) succeeded in maintaining rough tax parity between large pass-through businesses and large C corps but only if the 20% qualified business income (QBI) deduction is in effect and only if it’s made permanent, according to an EY study
commissioned by the S Corporation Association. In terms of both effective and marginal tax rates, the analysis shows that, prior to the TCJA, large S corps and C corps faced similar tax rates and this parity remained following the enactment of the TJCA. However, the sector will face significantly higher tax rates in 2026 than C corps with the expiration of key TCJA provisions, such as the 20% Section 199A deduction for QBI. The study is titled “Large S Corporations and the Tax Cuts and Jobs Act: The Economic Footprint of the Pass-Through Sector and the Impact of the TCJA.”
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