Section 199A has been one of the most impactful provisions created by the Tax Cuts and Jobs Act (TCJA). For business owners operating through pass-through entities—sole proprietorships, partnerships, S corporations, and certain trusts and estates—it has provided a deduction equal to 20 percent of qualified business income (QBI).

But this deduction is temporary. Unless Congress acts, Section 199A sunsets for tax years beginning after December 31, 2025. That means returns filed in 2026 and beyond—for the tax year 2026—will no longer include this substantial benefit.

For CPA firm leaders, this isn’t just a tax change. It is also a workflow change. It affects how firms prepare, review, and communicate with clients. The loss of 199A will increase liabilities for many taxpayers while also creating opportunities for CPAs to demonstrate advisory value.

Let’s explore what happens after 2025, how to triage impacted clients, updates your firm should make, and strategies to advise business owners when the 199A deduction disappears.

Section 199A Basics: What We Lose After 2025

How the Deduction Worked

Section 199A allows eligible taxpayers to deduct up to 20 percent of their QBI, subject to thresholds, limitations, and calculations tied to wages and qualified property.

For example:

A consultant earning $150,000 in net business income could deduct $30,000 under Section 199A.

This effectively reduced taxable income from $150,000 to $120,000, saving roughly $6,600 at a 22 percent marginal rate.

Without Section 199A, taxable income reverts to the full $150,000, substantially increasing the taxpayer’s liability.

What Happens After Expiration

Key points for firms:

• There is no carry-forward or grandfathering. The benefit ends completely after 2025.

• For high-income taxpayers, additional complexities tied to wage/basis rules and service business limitations disappear—but so does the deduction itself.

IRS Guidance Expected

The IRS is expected to issue final-year guidance in late 2025 to clarify issues such as treatment of basis, wage calculation questions, and entity allocations.

Who Will Be Most Affected?

High-Income Professionals and Pass-Throughs

Not all clients will experience the same level of impact. Firms should flag groups that have historically benefited most from the QBI deduction.

High-impact categories include:

• Sole proprietors filing Schedule C with steady net income over $100,000

• S corporation shareholders who optimized salary/dividend splits in part to leverage QBI deductions

• Partners receiving K-1 income with qualified business activity

Rental Real Estate Operators

Rental real estate operators who had self-rental or active rental QBI deductions will also lose significant benefits.

Smaller Businesses with Modest QBI

Even taxpayers with modest QBI may notice the change, since the deduction effectively lowered marginal rates. For instance, a small landlord earning $40,000 in QBI would no longer benefit from the $8,000 offset.

Workflow Changes Inside CPA Firms

Data Collection That Disappears

Section 199A has required detailed data collection since its introduction. Firms have had to request items such as:

• W-2 wage reports attributable to the business

• Unadjusted basis of qualified property (UBIA) to calculate limits

• Disclosure of service vs. non-service trade/business classification

Key Process Updates After 2025

Most of these requests generated delays and client confusion. With the deduction vanishing, firms can ultimately simplify their processes beginning with 2026 tax year returns.

Efficiency Gains for Preparers

Workflow updates for CPA firms:

• Client intake lists: Eliminate QBI-related questions effective for post-2025 years.

• Engagement letters: Revise language so that 199A no longer appears in the scope of service descriptions.

• Internal review protocols: Remove unnecessary QBI worksheets after 2025 so preparers focus only on relevant data points.

• Software prompts: Configure tax software to suppress QBI prompts starting with 2026 returns.

This is not just about technical compliance but also efficiency. Removing QBI from checklists will reduce time spent chasing irrelevant data.

Triage: Identifying and Prioritizing Impacted Clients

Step 1: Flag Prior-Year 199A Users

Generate a client list from tax software: Identify taxpayers who claimed Section 199A in prior years.

Step 2: Model the Tax Impact

Use last year’s numbers but remove the 199A deduction to show what the tax liability would have been.

Step 3: Segment Clients by Impact Level

Group clients into high, medium, and low impact categories. High impact means liability increases of several thousand dollars or more.

Step 4: Prioritize Outreach

Begin communication with high-impact clients first, preparing them for the change.

Example revisited: $150,000 Schedule C consultant

Net Profit: $150,000
QBI Deduction (2025): $30,000
Taxable Income (after deduction): $120,000
Tax (at 22%): $26,400

Without the deduction (2026):
Taxable Income: $150,000
Tax: $33,000
Increase in liability: $6,600

Multiply this effect across dozens of small-business clients, and the change becomes financially and emotionally significant.

Talking to Clients Before They Call You

Client Alerts and Notices

Send personalized notices to clients flagged as 199A users early in 2025, making them aware this is the final year.

Webinars and Group Q&A

Create group sessions outlining who is affected, what changes in 2026, and what planning steps are available.

One-on-One Advisory Sessions

For higher-income clients, hold strategy sessions midyear to model potential tax outcomes.

Year-End Planning Letters

Include clear language that Section 199A expires.

The message must be positioned carefully: this is a statutory expiration, not a preparer oversight.

Minimizing Rework in the First No-199A Filing Season

Standardizing Messaging

The 2026 tax year (filed in spring 2027) will be the first without Section 199A. Expect questions, confusion, and possible disputes. The more standardized your response, the less staff time will be wasted.

Training Staff for Consistency

Best practices:

• Attach a “change memo” to all returns of formerly impacted clients. Example: “The Qualified Business Income Deduction under Section 199A expired at the end of 2025. This return reflects current law.”

• Train preparers and reviewers on how to respond consistently to questions with “reason for change” talking points.

Using Before-and-After Simulations

Maintain “before-and-after” simulation files for clients who lose substantial refunds. This helps when justifying to clients why liability increased.

Publishing a Client FAQ

Publish a client FAQ in the portal titled “What Happened to My QBI Deduction?”

When clients see standardized, proactive messaging, they are less likely to suspect preparer error.

Advisory Opportunities: Life After QBI

Entity Structure Analysis

Some taxpayers formed S corporations primarily to leverage QBI. Without it, simplification to sole proprietorship may lower administrative costs.

S Corporation Compensation Planning

Without QBI, reducing shareholder salaries to maximize deductions is less relevant. Compensation planning should be reviewed through the lens of reasonable compensation and retirement plan contributions.

Maximizing Traditional Deductions

Direct clients toward traditional tax strategies—funding retirement accounts, maximizing HSA contributions, and evaluating business-expense tracking methods.

Exploring State PTE Elections

Some states have introduced Pass-Through Entity (PTE) tax elections that provide alternative deduction opportunities at the state and SALT level. CPA firms should analyze opportunities by jurisdiction.

Preparing for Broader TCJA Expirations

With the broader TCJA expirations approaching in 2026, the firm’s role as forward-looking advisor is more important than ever.

The expiration of 199A does not eliminate planning possibilities—it shifts the focus.

Extended FAQ for Firm Leaders and Clients

(kept in your original Q&A format — no changes needed)

Preparing Your Firm: Action Items for Leaders

Identify and Flag Clients Now

By fall 2025, firms should already be taking these steps:

• Client flagging: Identify which clients benefited from 199A and model out scenarios without it.

Update Communication and Documents

• Send proactive notices and prepare FAQs for early distribution.

Adjust Workflows and Checklists

• Adjust checklists, letters, and portals for the final year of QBI documentation in 2025, and strip it out completely for 2026.

Reframe Advisory Conversations

• Reposition conversations toward compensation planning, retirement funding, and multi-year projections that anticipate TCJA expirations.

Monitor Legislative Developments

• Assign someone in the firm responsibility for tracking developments through late 2025.

Being prepared for the expiration is not optional. Clients will expect clear explanations and planning ideas.

Final Thoughts

Section 199A has delivered a powerful benefit during its existence, but its legislative shelf life was clear from the beginning. The scheduled 2026 sunset is already law.

For CPAs, this change is an opportunity to simplify workflows, reclaim efficiency, and demonstrate tangible value to clients through proactive communication and advisory services. Clients who see higher liabilities in 2026 but also receive clear, well-timed planning advice will appreciate their CPA even more.

The firms that act now to update processes, prepare client communications, and focus on long-term advisory services will be best positioned for a smooth transition out of 199A.