Bill Details
HR.652 - 119th Congress
Status
Latest action
2025-01-23 - Referred to the House Committee on Ways and Means.
Introduced Date
2025-01-23
Policy Area
Taxation
Committees
View committees (1)
Cosponsors
6
0
0
AI Summary This summary was generated by AI from the bill text. AI can get information wrong.
This bill would change federal tax rules so that certain dividends paid by business development companies can receive the same 20% small business income deduction that already applies to some real estate investment trust dividends. In simple terms, it would give investors in qualifying business development companies the same tax treatment for certain interest-based dividends that investors in REITs already get. The goal is to create more equal tax treatment for different types of investment companies that help finance businesses, especially smaller ones.
- It applies to a special kind of dividend called a “qualified BDC interest dividend.”
- These dividends must come from a business development company that has chosen to be taxed as a regulated investment company and that earns net interest income tied to a qualified business.
- The change would extend the Section 199A deduction to these dividends in the same way it works for qualified REIT dividends.
- The new tax rule would take effect for tax years beginning after December 31, 2026.
Official Summaries
No summaries available
Current Full Text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 652 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 652
To amend the Internal Revenue Code of 1986 to allow the deduction under
section 199A to apply to qualified BDC interest dividends in the same
manner as qualified REIT dividends.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 23, 2025
Mr. Arrington introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow the deduction under
section 199A to apply to qualified BDC interest dividends in the same
manner as qualified REIT dividends.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Small Business Investor Tax Parity
Act of 2025''.
SEC. 2. DEDUCTION FOR QUALIFIED BUSINESS INCOME TO APPLY TO CERTAIN
INTEREST DIVIDENDS OF QUALIFIED BUSINESS DEVELOPMENT
COMPANIES.
(a) In General.--Subsections (b)(1)(B) and (c)(1) of section 199A
of the Internal Revenue Code of 1986 are each amended by inserting ``,
qualified BDC interest dividends,'' after ``qualified REIT dividends''.
(b) Qualified BDC Interest Dividend Defined.--Section 199A(e) of
the Internal Revenue Code of 1986 is amended by adding at the end the
following new paragraph:
``(5) Qualified bdc interest dividend.--
``(A) In general.--The term `qualified BDC interest
dividend' means any dividend from an electing business
development company received during the taxable year
which is attributable to net interest income of such
company which is properly allocable to a qualified
trade or business of such company.
``(B) Electing business development company.--For
purposes of this paragraph, the term `electing business
development company' means a business development
company (as defined in section 2(a) of the Investment
Company Act of 1940) which has an election in effect
under section 851 to be treated as a regulated
investment company.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2026.
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