Federal Corporate Income Tax rates. Corporations, including qualified personal service corporations (QPSCs) and members of a controlled group, are taxed at a flat federal corporate tax rate of 21 percent on taxable income. The Inflation Reduction Act of 2022 imposed a minimum tax of 15 percent for the largest corporations. Federal Individual Income Tax Rates. The federal individual tax rate applicable to pass through income for owners of sole proprietorships, S corporations, and Limited Liability Companies taxed as pass through entities depends on income. The tax rates for 2025 are: Tax Rate Individuals Married Filing Jointly 10% Up to $11,925 Up to $23,850 12% $11,926 to $48,475 $23,851 to $96,950 22% $48,476 to $103,350 $96,951 to $206,700 24% $103,351 to $197,300 $206,701 to $394,600 32% $197,301 to $250,525 $394,601 to $501,050 35% $250,526 to $626,350 $501,051 to $751,600 37% $626,351 or more $751,601 or more Net Investment Income Tax (NIIT). A 3.8 percent tax applies to individuals, estates, and trusts that have net investment income above applicable threshold amounts: $200,000 for single or head of household, $250,000 for married filing jointly, $125,000 for married filing separately. The tax is on interest, dividends, most capital gains, and income from passive business activities.
Federal Deduction for Qualified Business Income (QBI) of Individuals. The “One Big Beautiful Bill Act” (OB3) (H.R. 1, 119th Congress) includes a provision making § 199A permanent.
Effects of OB3 : • Permanence: Under the OB3, the 20 percent QBI deduction is made permanent for noncorporate taxpayers. • Technical tweaks / enhancements: o The “phase-in” windows for the income thresholds are widened. Married filers, what had been a $100,000 “phase-in range” is increased to $150,000; for other filers, from $50,000 to $75,000. o A minimum deduction floor of $400 is introduced for taxpayers with at least $1,000 of QBI from an active trade or business in which they materially participate, to ensure even small businesses with modest QBI still get at least that deduction (so long as other conditions are satisfied). o Otherwise, most of the existing limitation and guardrail structure remains intact (the same W-2 wage / UBIA limits, SSTB rules, etc. of the ended 2017 Tax Cuts and Jobs Act (TCJA))
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