Qualified family-owned small business deduction

From the 2024 DOR Tax Exemption Study

82.87.060(3) - Qualified family-owned small business deduction Description If certain conditions are met, an individual may deduct capital gains derived from the sale of substantially all the assets or transfer of the individual’s interest in a “qualified family-owned small business.” Purpose To avoid taxing the sale of a small business. Taxpayer ($ in millions): savings FY 2024 FY 2025 FY 2026 FY 2027 State Taxes $15.000 $16.000 $16.000 $15.000 Local Taxes $0.000 $0.000 $0.000 $0.000 Repeal of Repealing this deduction would increase revenues. exemption Potential ($ in millions): revenue gains FY 2024 FY 2025 FY 2026 FY 2027 from full repeal State Taxes $0.000 $0.000 $15.000 $14.000 Local Taxes $0.000 $0.000 $0.000 $0.000 Assumptions - This repeal takes effect January 1, 2025, and impacts 12 months of collections in fiscal year 2026. - Growth rate mirrors the long-term capital gains growth rate reflected in the Economic and Revenue Forecast Council's March 2023 forecast. - Individuals with estimated payments: - Will receive refunds in fall 2023, amounting to 12% of the estimated payments. - Will use deductions at the same frequency as return filers with similar amounts of tax due.