Small Business Investor Tax Parity Act of 2025
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Overview
This bill aims to level the tax treatment between dividends from Real Estate Investment Trusts (REITs) and dividends from qualified Business Development Companies (BDCs). Specifically, it amends the Internal Revenue Code to allow small business investors to deduct dividends from BDCs under section 199A in the same way they deduct REIT dividends. This change would provide greater tax benefits to investors in BDCs, which are often used by small businesses to raise capital.
Key provisions
- Allows qualified BDC interest dividends to be deducted under section 199A.
- Adds ‘qualified BDC interest dividends’ after ‘qualified REIT dividends’ in relevant IRS code sections.
- Defines ‘qualified BDC interest dividend’ as dividends from BDCs related to net interest income from a qualified trade or business.
- Specifies that an ‘electing business development company’ must have elected to be treated as a regulated investment company.
- Sets the effective date for the changes to January 1, 2027.
Who is affected
- Small business investors
- Business Development Companies (BDCs)
- Real Estate Investment Trusts (REITs)
- Taxpayers
Notable changes
- Equalizes tax treatment of dividends from BDCs and REITs.
- Expands the definition of eligible dividends for tax deduction.
Bill text
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Sponsors
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