The Tax Cuts and Jobs Act (TCJA), the massive tax reform law that took effect in 2018, established a new tax deduction for owners of pass-through businesses. Pass-through owners who qualify can deduct up to 20% of their net business income from their income taxes, reducing their effective income tax rate by 20%. This deduction began in 2018 and is scheduled to last through 2025—that is, it will end on January 1, 2026, unless extended by Congress.

You must have a pass-through business to qualify for this deduction, and that NOLO article explains some of these qualifications.

Pass-thru income can be business income subject to income taxation, which you can enter that as a taxable annual Special Receipt. Pass-thru income can also be related to rental income, which should be entered in your Real Estate setup.

How to determine the amount of your deduction may require help from your accountant, but the NOLO article linked above gives several examples, including this example for the simple case where the 20% deduction for taxable income is below the annual threshold

How the pass-through deduction is calculated depends on whether your taxable income (QBI income plus other taxable income) exceeds an annual threshold that is adjusted for inflation each year. For 2021, the threshold is taxable income up to \$329,800 if married filing jointly, or up to \$164,900 if single. If your income is within this threshold, your pass-through deduction is equal to 20% of your qualified business income (QBI). This is the maximum possible pass-through deduction.

Example. Tom is single and operates his public relations business as a sole proprietorship. His business earns \$100,000 in qualified business income during 2021. He also earned \$32,550 in investment income and took the \$12,550 standard deduction. His total taxable income for the year is \$120,000 (\$100,000 + \$32,550) – \$12,550 = \$120,000). His pass-through deduction is 20% x \$100,000 = \$20,000. He may deduct \$20,000 from his income taxes.

Once you determine your annual deduction, enter it in the table provided in Settings and Assumptions > Taxes > Pass-thru Deductions.