TO ALLOW A DEDUCTION FOR CERTAIN QUALIFIED BUSINESS EXPENSES UNDER THE INCOME TAX ACT OF 1929.

Fiscal Impact Statement Bill: HB1910 Bill Subtitle: TO ALLOW A DEDUCTION FOR CERTAIN QUALIFIED BUSINESS EXPENSES UNDER THE INCOME TAX ACT OF 1929. --------------------------------------------------------------------------------------------------------------------------------------- Sponsor: Rep. Lundstrum Basic Change: HB1910 adopts the provisions of 26 U.S.C. § 199A(a)-(h) as in effect on January 1, 2025. These are commonly referred to as the "qualified business income" (QBI) deductions. The federal provisions provide for a 20% deduction for qualified business income by a pass-through entity which HB1910 would adopt for Arkansas income tax purposes. Specifically, 26 U.S.C. § 199A provides a 20% deduction for the income, deduction, loss, and gain from a pass-through business for items connected with that business conducted in the United States or Puerto Rico. Specifically excluded from the QBI calculations are: • Wage income; • Reasonable compensation to an S corporation shareholder for services provided to the S corporation; • Guaranteed payments to a partner for services provided to a partnership; and • Investment income unrelated to a trade or business as defined in the Internal