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Hacking the Tax Plan: Ways to Profit Off the Republican Tax Bill notes:

If you run a pass-through business that earns up to $157,500 a year if you’re single ($315,000 if you’re married), you get a 21 percent tax break on all profit that comes through your company — in other words, only 80 percent of that income would be taxed.

Let's say an S Corp owned by 1 person with no employees makes $200,000 a year through consulting, i.e. billing his time.

Does that mean that only 80% of $200,000, i.e. $160,000 would be eligible for taxes?

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The limit has nothing to do with the income of the business entity; it has entirely to do with your (total) taxable income, both from the business and otherwise.

From the conference report (I will replace this with the actual law once that is published):

(3) MODIFICATIONS TO LIMIT BASED ON TAXABLE INCOME.—

(A) EXCEPTION FROM LIMIT.—In the case of any taxpayer whose taxable income for the taxable year does not exceed the threshold amount, paragraph (2) shall be applied without regard to subparagraph (B)

This is from Part II, Sec. 11011.

The subparagraph (B) limit is referring to the limitation that you cannot take a deduction greater than 50% of your W2 wages.

Further down, is a very similarly worded exception to the exclusion of Personal Services businesses:

(3) EXCEPTION FOR SPECIFIED SERVICE BUSINESSES BASED ON TAXPAYER’S INCOME.—

In both cases, the exclusion is based on the taxpayer's taxable income.

If your income was a bit more than that, and you didn't have any (legitimate) way to avoid some of that money hitting your personal tax return (or didn't want to), you'd have a $50,000 phaseout period ($100,000 filing jointly) where you'd still get to deduct some of the business income, but not all of it.

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