The 2018 Tax Cuts & Jobs Act create a flat 21% corporate tax bracket. In an effort to give a similar tax break to the non-corporate small business owners, the QBID was created. QBID stands for Qualified Business Income Deduction. This deduction is given on the individual level for owners of disregarded entities, shareholders of S Corporations and the general partners in partnerships. 

In it's most basic form, the QBID provides a 20% deduction to an individual on non-corporate business income. For example, if your individual portion of net income from your small business is  $100,00, you will receive a $20,000 deduction on page 2 of your individual form 1040 tax return. 

Unfortunately, it is not quite this cut-and-dry. There are many limitations and phaseouts that are also included in the new legislation that may affect you. Taxpayers who earn more than $157,000 (or $315,000 on a married filing joint return), as well as those in service industries, are subject to these limitations and phase-outs.  

If you are a small business owner, it is vital that you sit down with a tax professional every year to do some tax planning. This has always been recommended so that you can see a projection of your anticipated tax liability for the year, ensure you've paid in enough tax to avoid any underpayment penalties, and ensure that you've maximized business expenses and retirement contributions for the year (to minimize your overall tax liability). The QBID just adds another piece to the puzzle. Now you need to meet with your tax professional to also ensure that you are maximizing the new Qualified Business Income Deduction.