What deduction can taxpayers take for qualified business income from a pass-through entity?

The deduction that taxpayers can take for qualified business income from a pass-through entity is known as the Qualified Business Income Deduction (QBID). This deduction allows eligible taxpayers to deduct up to 20% of their qualified business income, which is the net income earned from a trade or business operated as a sole proprietorship, partnership, S corporation, or similar entity.

The QBID was introduced by the Tax Cuts and Jobs Act and is designed to provide tax relief and encourage investment in small businesses. It primarily benefits owners of pass-through entities, allowing them to reduce their taxable income based on the income generated by these businesses.

The other options do not apply in this context. The standard deduction and itemized deductions are deductions available to all individuals on their personal income taxes regardless of business income. A business expense deduction pertains to specific expenses necessary for running a business and does not refer to the deduction allowed for qualified business income. Thus, the Qualified Business Income Deduction is the appropriate and specific deduction for taxpayers receiving income from pass-through entities, aligning with the provisions enacted under the tax code.