Research

The Pass-Through Economy Report 2026: How U.S. Business Income Left the Corporate Form

By The Ledgerism Editorial Team · The Ledgerism Brief Editorial Team produces original, methodology-disclosed accounting and tax research—data trackers, databases, and reference guides built to be the most-cited source in the field. Every figure is verified against primary sources including FASB, the IRS, the PCAOB, NASBA, the AICPA, and state boards of accountancy.

A data-led history of the shift from C corporations to pass-through entities (S corporations, partnerships and LLCs taxed as partnerships, and Schedule C sole proprietorships), compiled from IRS Statistics of Income primary tables, the Joint Committee on Taxation, the Congressional Research Service, and the Tax Policy Center Briefing Book.

Prepared by The Ledgerism Brief. Last updated 2026-06-29. All dollar figures are nominal unless stated. Tax-year (TY) labels mark the period each figure covers.

Executive summary

• Pass-through entities (S corporations, partnerships, and sole proprietorships) accounted for 95.3 percent of all U.S. business returns in TY2015, up from 83.4 percent in TY1980 (IRS SOI Integrated Business Data, Table 1).
• Excluding sole proprietorships, pass-throughs were 83.6 percent of all corporate-and-partnership business entities in TY2015, up from 47.1 percent in TY1980, a figure the Tax Policy Center summarizes as a move from 47 percent to “more than 80 percent” (IRS SOI; Tax Policy Center Briefing Book).
• The pass-through share of total business net income (less deficit) rose from 20.7 percent in TY1980 to 49.9 percent in TY2015, computed directly from IRS SOI Integrated Business Data (Ledgerism derived series; see Original synthesis).
• The C corporation share of total business net income (less deficit) fell from 74.6 percent in TY1980 to 36.7 percent in TY2015 (IRS SOI Integrated Business Data, Table 1).
• S corporation returns grew from 545,389 in TY1980 to 4,487,336 in TY2015, an increase of more than eight-fold, after the Tax Reform Act of 1986 raised the relative appeal of pass-through status (IRS SOI Integrated Business Data, Table 1).
• Partnership returns reached more than 4.5 million for TY2023, representing more than 30.2 million partners (IRS SOI Partnership Statistics).
• The Tax Cuts and Jobs Act created the Section 199A 20 percent qualified business income deduction effective for tax years beginning after December 31, 2017; claims rose from 18.7 million in TY2018 to 25.7 million in TY2022 (Congressional Research Service IF12838).
• The One Big Beautiful Bill Act, signed July 4, 2025, made the Section 199A deduction permanent at 20 percent for tax years beginning after December 31, 2025 (H.R. 1, 119th Congress; multiple practitioner analyses citing the enacted text).

Key findings

1. Pass-through entities (S corporations, partnerships, and nonfarm sole proprietorships) were 95.3 percent of all U.S. business returns in TY2015, versus 83.4 percent in TY1980 (IRS SOI Integrated Business Data, Table 1).
2. Excluding sole proprietorships, the pass-through share of all corporate-and-partnership entities rose from 47.1 percent in TY1980 to 83.6 percent in TY2015 (IRS SOI Integrated Business Data, Table 1).
3. The pass-through share of total business net income (less deficit) rose from 20.7 percent in TY1980 to 49.9 percent in TY2015 (Ledgerism derived series from IRS SOI Integrated Business Data, Table 1).
4. C corporation returns fell from 2,163,458 in TY1980 to 1,611,236 in TY2015, a decline of roughly one-quarter over 35 years (IRS SOI Integrated Business Data, Table 1).
5. S corporation returns rose from 545,389 in TY1980 to 4,487,336 in TY2015 (IRS SOI Integrated Business Data, Table 1).
6. Partnership returns rose from 1,379,654 in TY1980 to 3,715,187 in TY2015 (IRS SOI Integrated Business Data, Table 1).
7. Nonfarm sole proprietorship returns rose from 8,931,712 in TY1980 to 25,226,245 in TY2015, and reached 31,125,909 in TY2023 (IRS SOI Integrated Business Data, Table 1; IRS SOI Nonfarm Sole Proprietorship Statistics, Table 1, TY2023).
8. LLCs filing as partnerships grew from 118,559 returns in TY1995 to 2,515,073 in TY2015, reporting $247.5 billion of net income (less deficit) in TY2015 (IRS SOI Integrated Business Data, Table 1).
9. Partnership net income (less deficit) rose from $8.2 billion in TY1980 to $780.5 billion in TY2015 (IRS SOI Integrated Business Data, Table 1).
10. S corporation net income (less deficit) rose from $2.5 billion in TY1980 to $457.0 billion in TY2015 (IRS SOI Integrated Business Data, Table 1).
11. Nonfarm sole proprietorship net income (less deficit) was $377.2 billion in TY2023, up from $54.9 billion in TY1980 (IRS SOI Nonfarm Sole Proprietorship Statistics, Table 1, TY2023; IRS SOI Integrated Business Data, Table 1).
12. Partnerships reported more than 30.2 million partners for TY2023, a 5.0 percent increase over TY2022 (IRS SOI Partnership Statistics).
13. In TY2020, individuals reported about $1.04 trillion of net income from all pass-throughs, equal to 8.3 percent of total adjusted gross income on individual returns (Tax Policy Center Briefing Book).
14. More than 75 percent of net income from partnerships and S corporations was reported by the top 1 percent of tax units (Tax Policy Center Briefing Book, 2020 basis).
15. The Joint Committee on Taxation estimated the Section 199A deduction would reduce federal revenue by $57.6 billion in fiscal year 2024 and $60.9 billion in fiscal year 2025 (per Congressional Research Service summaries of JCT estimates).

1. Definitions and scope

A “pass-through” business pays no entity-level federal income tax; its profit is reported on the owners’ returns and taxed under the individual income tax. The Tax Policy Center defines the category as sole proprietorships, partnerships, limited liability companies (LLCs), and S corporations (Tax Policy Center Briefing Book, “What are pass-through businesses?”).

This report uses IRS Statistics of Income (SOI) tabulations, which classify business returns by legal form:

• Nonfarm sole proprietorships: individuals filing Schedule C (Form 1040).
• Partnerships (Form 1065): including general partnerships, limited partnerships, LLPs, and LLCs that elect partnership taxation.
• S corporations (Form 1120-S): corporations that elect pass-through treatment.
• C corporations (Form 1120 and related): the only entity type taxed at the entity level.

Two measurement notes that recur throughout this report:

1. “Net income (less deficit)” nets profitable and loss-making firms together; “net income” counts only firms with positive income. The IRS Integrated Business Data file reports both. This report leads with “net income (less deficit)” because it is consistently available across all four forms for the full TY1980-TY2015 span.
2. The single IRS file that places all four forms on one comparable basis (Integrated Business Data, Table 1) was last revised in February 2020 and ends at TY2015. Per-entity SOI studies extend further (partnerships and sole proprietorships to TY2023), but the IRS has not merged later years into one cross-entity file. Cross-entity shares in this report therefore terminate at TY2015; later single-entity figures are reported where verifiable and labeled as such.

2. The long shift in business counts (TY1980-TY2015)

The number of pass-through returns grew while C corporations declined in both relative and absolute terms.

C corporation returns peaked in the mid-1980s near 2.6 million and then fell to 1,611,236 in TY2015 (IRS SOI Integrated Business Data, Table 1). Over the same span, S corporation returns rose more than eight-fold and partnership returns nearly tripled.

Source: IRS, Statistics of Income Division, Integrated Business Data, Table 1, Tax Years 1980-2015 (file 15otidb1.xls; last revised February 2020).

The two structural breaks visible in the counts line up with tax law. S corporation counts roughly doubled between TY1986 and TY1990, the window in which the Tax Reform Act of 1986 (TRA86) compressed individual rates below the top corporate rate and ended the General Utilities doctrine, raising the cost of operating inside a C corporation. The Tax Policy Center attributes the rising pass-through share specifically to changes “since passage of the Tax Reform Act of 1986” (Tax Policy Center Briefing Book).

The second break is the LLC era. Following the IRS “check-the-box” entity-classification regulations effective in 1997, LLCs taxed as partnerships grew from 118,559 returns in TY1995 to 2,515,073 in TY2015 (IRS SOI Integrated Business Data, Table 1). LLCs are a subset of the partnership total, not a separate legal column.

For TY2023, the most recent single-entity SOI studies report more than 4.5 million partnership returns and 31,125,909 nonfarm sole proprietorship returns (IRS SOI Partnership Statistics; IRS SOI Nonfarm Sole Proprietorship Statistics, Table 1, TY2023). These are not directly comparable with the merged TY2015 cross-entity file because of timing and methodology differences, and are reported here as the latest single-form counts.

3. The shift in business income (TY1980-TY2015)

Income tells a sharper story than counts. In TY1980, C corporations earned about three-quarters of all business net income (less deficit); by TY2015 they earned about one-third.

Source: IRS, Statistics of Income Division, Integrated Business Data, Table 1, Tax Years 1980-2015. Figures rounded from thousands of dollars. Detail may not sum to totals because of rounding and because the “All businesses” net income (less deficit) total includes regulated investment companies and REITs reported separately in the source.

Three observations:

1. Partnership net income (less deficit) was negative or near zero through the mid-1980s (for example, minus $17.4 billion in TY1986) before rising to $780.5 billion in TY2015. The early losses reflect the tax-shelter partnerships that TRA86 and the passive-activity-loss rules were designed to curb.
2. S corporation net income (less deficit) grew from $2.5 billion in TY1980 to $457.0 billion in TY2015.
3. C corporation income is more cyclical: it fell to $800.8 billion in TY2010 in the aftermath of the financial crisis, then recovered.

4. Post-1986 and post-2017 policy shifts

Tax Reform Act of 1986 (TRA86)

TRA86 set the top individual rate below the top corporate rate for the first time in modern history and repealed the General Utilities doctrine, which had let C corporations distribute appreciated assets in liquidation without a corporate-level gain. Together these changes made the C corporation form more expensive to enter and exit. The Tax Policy Center identifies TRA86 as the inflection point for the pass-through share (Tax Policy Center Briefing Book). The S corporation count nearly doubled between TY1986 and TY1990 (826,214 to 1,575,092; IRS SOI Integrated Business Data, Table 1).

Tax Cuts and Jobs Act of 2017 (TCJA) and Section 199A

The TCJA cut the C corporation rate to a flat 21 percent and, to preserve relative parity, created the Section 199A deduction allowing eligible owners to deduct up to 20 percent of qualified business income (QBI). The deduction applies to tax years beginning after December 31, 2017 (Congressional Research Service IF12838; IRS, “Qualified business income deduction”).

• Section 199A claims rose from 18.7 million in TY2018 to 25.7 million in TY2022 (Congressional Research Service IF12838).
• The Joint Committee on Taxation estimated the deduction would reduce federal revenue by $57.6 billion in fiscal year 2024 and $60.9 billion in fiscal year 2025 (per Congressional Research Service summaries of JCT estimates).
• With the 20 percent deduction, the effective top federal rate on qualifying pass-through income is reduced from 37 percent to a maximum of 29.6 percent through 2025 (Tax Policy Center Briefing Book, “How are pass-through businesses taxed?”).

One Big Beautiful Bill Act of 2025 (OBBBA)

Section 199A had been scheduled to expire after 2025. The One Big Beautiful Bill Act (H.R. 1, 119th Congress), signed into law July 4, 2025, removed the expiration date and made the 20 percent QBI deduction permanent for tax years beginning after December 31, 2025. OBBBA also widened the wage-and-property phase-in ranges to $75,000 (single) and $150,000 (joint), indexed for inflation after 2026, and added an inflation-indexed minimum deduction of $400 for taxpayers with at least $1,000 of active QBI (multiple practitioner analyses citing the enacted statutory text; see Sources, items 9-10). This report flags OBBBA’s downstream effect on future SOI series as not yet observable: TY2026 returns are not filed until 2027 and will be tabulated later.

5. Pass-through income on individual returns (TY2020)

The Tax Policy Center reports pass-through income as it appears on individual returns, which differs from the entity-level SOI tabulations in Sections 2-3.

• In TY2020, individuals reported about $1.04 trillion of net income from all pass-throughs, equal to 8.3 percent of total adjusted gross income (AGI) (Tax Policy Center Briefing Book).
• Nonfarm sole proprietor income was $337 billion, or 2.7 percent of AGI, in TY2020 (Tax Policy Center Briefing Book).
• Partnership and S corporation income was $707 billion, or 5.6 percent of AGI, in TY2020 (Tax Policy Center Briefing Book).
• More than 75 percent of partnership and S corporation net income was reported by the top 1 percent of tax units (Tax Policy Center Briefing Book).

These figures are reported on a different basis (individual returns, AGI) than the SOI entity tables, and the two should not be added together.

6. Original synthesis

Insight 1: The Ledgerism Pass-Through Net-Income Share Index (TY1980-TY2015)

Formula: pass-through share of net income (less deficit) = (S corporation + partnership + nonfarm sole proprietorship net income less deficit) / (all-business net income less deficit), each year, from IRS SOI Integrated Business Data, Table 1.

Logic and inputs: the numerator sums rows for S corporation “total net income (less deficit),” partnership “net income (less deficit),” and nonfarm sole proprietorship “net income (less deficit)”; the denominator is the all-business “net income (less deficit)” row. All values are nominal, in thousands of dollars in the source, converted to billions.

Reading: the pass-through share crossed 50 percent around TY2010-TY2012, then eased to 49.9 percent in TY2015 as C corporation income recovered. The series is volatile because it nets losses; corporate income falls faster than pass-through income in downturns (note the TY2010 spike to 52.4 percent driven by depressed C corporation income), so the share moves with the business cycle as well as with structure.

Limitations: this index uses “net income (less deficit),” which can swing with losses; the “net income only” basis would show a smoother, generally higher pass-through share. The Tax Policy Center’s widely cited statement that pass-throughs excluding sole proprietorships earn “more than 50 percent of total business net income, up from about 22 percent in 1980” uses the positive-income (“net income”) basis and excludes sole proprietorships, which is why it differs from the figures above. Both bases are legitimate; the choice is stated so the numbers are reproducible.

Insight 2: The Ledgerism Entity-Mix Index, excluding sole proprietorships (TY1980-TY2015)

Formula: pass-through share of corporate-and-partnership entities = (S corporations + partnerships) / (C corporations + S corporations + partnerships), by return counts, from IRS SOI Integrated Business Data, Table 1.

Reading: this index reproduces, from primary SOI data, the Tax Policy Center’s headline that pass-throughs (excluding sole proprietorships) rose from 47 percent of business entities in 1980 to “more than 80 percent” by 2015. The independent reconstruction (47.1 percent in TY1980 to 83.6 percent in TY2015) matches the published summary, which validates the underlying tabulation.

Limitations: these are SOI return counts, not Census firm counts; the Census-based “share of firms” figures cited by some sources differ slightly because of different units (firms versus returns) and coverage.

Insight 3: The C corporation income-retreat ratio

Formula: C corporation share of all-business net income (less deficit) = C corporation net income (less deficit) / all-business net income (less deficit), from IRS SOI Integrated Business Data, Table 1.

• TY1980: 74.6 percent.
• TY1986: 59.3 percent.
• TY1990: 50.1 percent.
• TY2000: 35.2 percent.
• TY2015: 36.7 percent.

Reading: the C corporation share of business net income (less deficit) roughly halved between TY1980 and TY2000 and then stabilized in the mid-30s percent range, while pass-throughs absorbed the difference. This is the mirror image of Insight 1.

Limitations: same net-of-loss caveat; the C corporation share is cyclically sensitive and the “all-business” denominator includes RICs and REITs reported separately in the source file.

7. Charts to create

1. “The crossover: pass-through vs C corporation share of business net income, 1980-2015.” Data: Insight 1 and Insight 3 series. Source: IRS SOI Integrated Business Data, Table 1. Insight: shows pass-throughs overtaking C corporations around the late 2000s. Citation-worthy because it is the single clearest visual of the structural shift.
2. “Business entity mix excluding sole proprietors, 1980-2015 (stacked area).” Data: Insight 2 table. Source: IRS SOI Integrated Business Data, Table 1. Insight: visualizes the 47 percent to 83.6 percent move and the post-1986 and post-1997 inflection points.
3. “S corporation returns, 1980-2015.” Data: row in Section 2 table. Source: IRS SOI Integrated Business Data, Table 1. Insight: the eight-fold rise, with a visible jump after TRA86.
4. “LLCs taxed as partnerships, 1995-2015.” Data: 118,559 (TY1995) to 2,515,073 (TY2015). Source: IRS SOI Integrated Business Data, Table 1. Insight: the check-the-box era in one line.
5. “Section 199A claims, 2018-2022.” Data: 18.7M to 25.7M claims. Source: Congressional Research Service IF12838. Insight: the policy that locked in the pass-through advantage, now permanent under OBBBA.

8. Methodology

Source selection: Tier-1 primary sources only for the core time series. The spine of this report is the IRS Statistics of Income Integrated Business Data, Table 1 (file 15otidb1.xls), the single official file placing all four business forms on one comparable basis, TY1980-TY2015, last revised February 2020. Single-entity extensions to TY2023 come from the corresponding SOI partnership and sole proprietorship studies. Policy figures come from the Joint Committee on Taxation (as summarized in Congressional Research Service report IF12838) and the enacted statutory text of TCJA and OBBBA. Income-on-individual-returns figures come from the Tax Policy Center Briefing Book, which cites IRS SOI individual data.

Inclusion and exclusion rules: every figure carries a tax year and a source. Figures that could not be verified against a primary or clearly-sourced Tier-1 secondary source were excluded. No projections are presented as actuals.

Handling conflicting numbers: where a published share (Tax Policy Center) used a different basis than the raw SOI file, both bases are reported and labeled (net income vs net income less deficit; with vs without sole proprietorships; firms vs returns). The derived indices were reconstructed independently from the IRS file; the entity-mix index reproduces the Tax Policy Center summary, which serves as a cross-check.

Derived figures: the three indices in Section 6 are computed by The Ledgerism Brief from IRS SOI Integrated Business Data, Table 1, using the formulas stated with each index.

Data limitations: (a) the merged cross-entity file ends at TY2015; (b) “net income (less deficit)” nets losses and is cyclically volatile; (c) SOI return counts differ from Census firm counts; (d) OBBBA’s effect on the series is not yet observable. Date of last update: 2026-06-29.

9. Source quality ranking

Tier 1 (primary government and official sources):
– IRS Statistics of Income, Integrated Business Data, Table 1 (TY1980-TY2015). Core time series.
– IRS Statistics of Income, Partnership Statistics (TY2023). Recent partnership counts and partners.
– IRS Statistics of Income, S Corporation Statistics (through TY2017 complete report).
– IRS Statistics of Income, Nonfarm Sole Proprietorship Statistics, Table 1 (TY2023). Recent sole-proprietor net income.
– Joint Committee on Taxation, Section 199A revenue estimates (as summarized by CRS).
– Congressional Research Service, report IF12838, “Selected Issues in Tax Policy: Section 199A Deduction for Pass-Through Business Income.”
– Enacted statutory text: Tax Cuts and Jobs Act (2017) Section 199A; One Big Beautiful Bill Act, H.R. 1, 119th Congress (2025).

Tier 2 (credible policy research citing primary data):
– Tax Policy Center Briefing Book, “What are pass-through businesses?” and “How are pass-through businesses taxed?” (cites IRS SOI).
– Tax Foundation, “An Overview of Pass-through Businesses in the United States” (cites IRS SOI and Census; used for context only, not for headline numbers).

Tier 3: practitioner analyses of OBBBA’s Section 199A changes (RSM, Foster, Barnes Dennig, and others) were used only to corroborate the enacted statutory facts (permanence, phase-in ranges, minimum deduction), each of which traces to H.R. 1.

Excluded and why: the IRS Section 199A claim totals beyond TY2022 were not located in a primary table at the time of writing and are not presented. Advocacy-framed distributional characterizations (for example, “windfall to the wealthy”) were excluded as non-neutral; only the underlying sourced statistics were retained.

10. Citation format (selected statistics)

• Pass-through share of business returns: Source: IRS, Statistics of Income Division, Integrated Business Data, Table 1, Tax Years 1980-2015 (revised February 2020).
• Pass-through net-income-share index: Source: Ledgerism Brief calculation from IRS, Statistics of Income Division, Integrated Business Data, Table 1, Tax Years 1980-2015.
• Section 199A claims and cost: Source: Congressional Research Service, IF12838, Section 199A Deduction for Pass-Through Business Income, citing Joint Committee on Taxation estimates.
• Pass-through income as share of AGI: Source: Tax Policy Center, Briefing Book, "What are pass-through businesses?", Tax Year 2020.
• OBBBA permanence: Source: One Big Beautiful Bill Act, H.R. 1, 119th Congress, enacted July 4, 2025, Section 199A amendments.
• TY2023 sole proprietorships: Source: IRS, Statistics of Income Division, Nonfarm Sole Proprietorship Statistics, Table 1, Tax Year 2023.

11. Journalist-friendly additions

Most quotable statistics

• Pass-throughs were 95.3 percent of U.S. business returns in TY2015, up from 83.4 percent in TY1980 (IRS SOI).
• The pass-through share of business net income (less deficit) rose from 20.7 percent in TY1980 to 49.9 percent in TY2015 (Ledgerism calculation from IRS SOI).
• Excluding sole proprietors, pass-throughs went from 47.1 percent of business entities in TY1980 to 83.6 percent in TY2015 (IRS SOI).
• The C corporation share of business net income (less deficit) fell from 74.6 percent in TY1980 to 36.7 percent in TY2015 (IRS SOI).
• Section 199A claims rose from 18.7 million (TY2018) to 25.7 million (TY2022); OBBBA made the deduction permanent on July 4, 2025 (CRS IF12838; H.R. 1).

Data limitations

The merged four-form IRS file ends at TY2015. “Net income (less deficit)” nets losses and swings with the business cycle, so share figures on that basis differ from positive-income (“net income”) bases used elsewhere. SOI return counts are not identical to Census firm counts. OBBBA’s effect on the data is not yet observable.

Downloadable dataset (recommended fields)

tax_year, form_of_business, number_of_returns, total_receipts_usd_000, business_receipts_usd_000, net_income_less_deficit_usd_000, net_income_usd_000, deficit_usd_000, pass_through_flag, source, source_url, last_revised

Press summary (about 150 words)

Over four decades, U.S. business income quietly migrated out of the C corporation. IRS Statistics of Income data show pass-through entities, that is S corporations, partnerships and LLCs, and sole proprietorships, grew from 83.4 percent of business returns in 1980 to 95.3 percent in 2015. The shift in profit is starker: the C corporation share of business net income (less deficit) fell from 74.6 percent in 1980 to 36.7 percent in 2015, while the pass-through share rose from 20.7 percent to 49.9 percent over the same span. Two policy events bracket the story. The Tax Reform Act of 1986 made the pass-through form cheaper, and S corporation counts nearly doubled by 1990. The 2017 Tax Cuts and Jobs Act added the 20 percent Section 199A deduction, claimed by 25.7 million taxpayers by 2022. In July 2025, the One Big Beautiful Bill Act made that deduction permanent.

Suggested headlines

1. The Pass-Through Takeover: How 95 Percent of U.S. Businesses Stopped Paying Corporate Tax
2. From 21 Percent to Permanent: The Section 199A Deduction Locks In the Pass-Through Era
3. The C Corporation’s Long Retreat: Business Income Share Halved Since 1980
4. After 1986, Business Income Left the Corporate Form and Never Came Back
5. 25.7 Million Claims Later, the 20 Percent Pass-Through Break Is Here to Stay

FAQs

1. What is a pass-through business? A business whose profit is taxed on the owners’ individual returns, not at the entity level: sole proprietorships, partnerships, LLCs, and S corporations (Tax Policy Center).
2. How many U.S. businesses are pass-throughs? In TY2015, 95.3 percent of all business returns were pass-throughs (IRS SOI Integrated Business Data, Table 1).
3. How has that changed since 1980? The pass-through share of returns rose from 83.4 percent (TY1980) to 95.3 percent (TY2015); excluding sole proprietors, from 47.1 percent to 83.6 percent (IRS SOI).
4. What share of business income do pass-throughs earn? On a net-income-less-deficit basis, 49.9 percent in TY2015, up from 20.7 percent in TY1980 (Ledgerism calculation from IRS SOI). The Tax Policy Center reports “more than 50 percent” on a positive-income basis excluding sole proprietors.
5. Why did pass-throughs grow? The Tax Reform Act of 1986 lowered individual rates relative to corporate rates and ended the General Utilities doctrine, and 1997 check-the-box rules enabled LLCs (Tax Policy Center; IRS SOI).
6. How many S corporations are there? S corporation returns rose from 545,389 (TY1980) to 4,487,336 (TY2015) (IRS SOI).
7. How many partnerships are there now? More than 4.5 million partnership returns and more than 30.2 million partners for TY2023 (IRS SOI Partnership Statistics).
8. What is Section 199A? A TCJA deduction of up to 20 percent of qualified business income for pass-through owners, effective for tax years after December 31, 2017 (CRS IF12838).
9. Is the 199A deduction still in effect? Yes. The One Big Beautiful Bill Act, signed July 4, 2025, made it permanent at 20 percent for tax years after December 31, 2025 (H.R. 1, 119th Congress).
10. How concentrated is pass-through income? More than 75 percent of partnership and S corporation net income was reported by the top 1 percent of tax units in TY2020 (Tax Policy Center).

12. Sources

1. IRS, Statistics of Income Division. SOI Tax Stats, Integrated Business Data (Table 1, Tax Years 1980-2015). https://www.irs.gov/statistics/soi-tax-stats-integrated-business-data (data file: https://www.irs.gov/pub/irs-soi/15otidb1.xls)
2. IRS, Statistics of Income Division. SOI Tax Stats, Partnership Statistics (Tax Year 2023). https://www.irs.gov/statistics/soi-tax-stats-partnership-statistics
3. IRS, Statistics of Income Division. SOI Tax Stats, S Corporation Statistics. https://www.irs.gov/statistics/soi-tax-stats-s-corporation-statistics
4. IRS, Statistics of Income Division. SOI Tax Stats, Nonfarm Sole Proprietorship Statistics (Table 1, Tax Year 2023). https://www.irs.gov/statistics/soi-tax-stats-nonfarm-sole-proprietorship-statistics (data file: https://www.irs.gov/pub/irs-soi/23sp01br.xls)
5. Congressional Research Service. “Selected Issues in Tax Policy: Section 199A Deduction for Pass-Through Business Income” (IF12838). https://www.congress.gov/crs-product/IF12838
6. Joint Committee on Taxation. “Overview of the Deduction for Qualified Business Income: Section 199A” (2019). https://www.jct.gov/publications/2019/overview-of-deduction-for-qualified-business-income-section-199a/
7. Tax Policy Center. Briefing Book, “What are pass-through businesses?” https://taxpolicycenter.org/briefing-book/what-are-pass-through-businesses
8. Tax Policy Center. Briefing Book, “How are pass-through businesses taxed?” https://taxpolicycenter.org/briefing-book/how-are-pass-through-businesses-taxed
9. IRS. “Qualified business income deduction.” https://www.irs.gov/newsroom/qualified-business-income-deduction
10. One Big Beautiful Bill Act, H.R. 1, 119th Congress (2025), Section 199A amendments (enacted July 4, 2025). Practitioner analyses corroborating enacted text: https://www.foster.com/larry-s-tax-law/one-big-beautiful-bill-act-part-4-qualified-business-income-deduction-code-section-199a and https://rsmus.com/insights/services/business-tax/obbba-tax-qbi-deduction.html
11. Tax Foundation. “An Overview of Pass-through Businesses in the United States” (context only). https://taxfoundation.org/research/all/federal/overview-pass-through-businesses-united-states/

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