# Mom and Pop Tax Relief Act: What It Actually Does

This bill makes changes to a tax break that currently exists for small business owners and self-employed people. Right now, if you own a business (like a plumbing company, consulting firm, or online store), you can deduct up to 20 percent of your business income from your taxes. This bill simplifies that system and makes it more generous for smaller operations, but it also removes some of the tax advantages that larger business owners currently enjoy.

The main change is straightforward: instead of calculating a percentage of your business income, the bill creates a flat $25,000 deduction for business owners. So if you're a small business owner making $50,000 in business income, you'd get to deduct $25,000 of it, meaning you'd only pay taxes on $25,000. If you're making $20,000, you'd deduct $20,000 and pay taxes on nothing. However, this benefit starts to disappear once your total income exceeds $200,000 (or $400,000 if you're married filing jointly). For every dollar you earn above those thresholds, your deduction gets reduced dollar-for-dollar until it's gone completely.

The bill also removes several complicated rules that currently apply to certain types of businesses and business structures. These rules involved wage requirements and restrictions on service businesses—things that made tax filing more complicated for many small business owners. By eliminating these restrictions, the bill makes the tax code simpler for people running their own businesses, though it does mean some higher-income business owners will lose tax advantages they currently have. The changes would take effect for tax years starting in 2026.