Small Business Investor Tax Parity Act of 2025
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed Senate
- Passed House
- 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 in the same way they deduct dividends from REITs, under section 199A of the tax code. 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 treated the same as qualified REIT dividends for tax purposes.
- Amends section 199A of the Internal Revenue Code to include ‘qualified BDC interest dividends’.
- Defines ‘qualified BDC interest dividend’ as dividends from BDCs related to net interest income allocated to a qualified trade or business.
- Establishes the definition of an ‘electing business development company’ as a BDC that has elected to be treated as a regulated investment company.
- Specifies that the changes apply to taxable years beginning after December 31, 2026.
Who is affected
- Small business investors
- Business Development Companies (BDCs)
- Real Estate Investment Trusts (REITs)
- Taxpayers
Notable changes
- Provides parity in tax treatment between REIT and BDC dividends for small business investors.
Bill text
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Sponsors
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