How the One Big Beautiful Bill could reduce your taxes

Welcome to CRE Broker Playbook!

The House passed the "One Big Beautiful Bill" in a narrow 215-214-1 vote on May 22nd, and it's now heading to the Senate. While the final version may differ from what we're seeing today, there's at least some value in understanding at a high level of how these proposed changes could impact your taxes and business.

This is not a prediction—simply a practical look at how these proposed changes might affect your business if enacted as written today. Let's dive into the numbers.

Today we will focus on the enhanced qualified business income deduction.

The QBI Deduction removes 20% of your S Corp’s net income from being taxed. The new bill bumps this up to 23%!

Let’s take a look at how this effects Jane and Dan

Meet Jane

Jane, based in Austin, TX, specializes in selling apartments across the country. She's had a strong year with several major deals closing.

Business Financials:

• Annual Revenue: $750,000

• Business Expenses: $29,000

• Profit Before Owner's Salary: $721,000

• Reasonable Owner's Salary: $280,000

• Filing Status: Single

Meet Dan

Dan, based in Orlando, FL, specializes in selling car washes in the southeast. He is a young broker and is looking to have his best year so far and take home $300,000 this year.

Business Financials:

• Annual Revenue: $300,000

• Business Expenses: $23,000

• Profit Before Owner's Salary: $277,000

• Reasonable Owner's Salary: $106,000

• Filing Status: Single

Why This Matters for Commercial Real Estate Brokers?

Enhanced QBI Deduction Benefits

Real estate agents and brokers are specifically carved out as qualified businesses for Section 199A purposes, meaning you're not subject to the "specified service trade or business" limitations that affect other professional services. The increase from 20% to 23% makes this deduction even more valuable.

Notice how neither Jane or Dan get the QBI Deduction if they are simply 1099.

If you don’t have an S Corp, there is an income phaseout (a very complicated calculation that includes ALL income, even income earned from a spouse)!

The main benefit of the S Corp since 2017 is that the QBI deduction is preserved and if the bill passes, the deduction will increase.

What else?

Next week we will dive into two other topics and how they can affect Jane and Dan’s businesses. The potential return of 100% bonus depreciation and expansion of opportunity zones.

I’m a firm believer that investment sales brokers who can articulate these two items to investors will have a strong leg up on the competition.

Thanks for reading to the end.

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