WASHINGTON (Reuters) - The U.S. Treasury on Wednesday proposed tax regulations for a new 20 percent income tax deduction for owners of businesses organized as pass-through entities, including rules to prevent the measure from becoming a tax loophole for wealthy Americans.

FILE PHOTO: U.S. Secretary of the Treasury Steven Mnuchin arrives for a news conference at the G20 Meeting of Finance Ministers in Buenos Aires, Argentina, July 22, 2018. REUTERS/Marcos BrindicciREUTERS/ /File Photo

The regulations are intended to provide everything pass-through owners need to comply with the Republican Tax Cuts and Jobs Act, a sweeping overhaul of the U.S. tax code that President Donald Trump signed into law in December.

About 30 million U.S. businesses, including many small “Mom and Pop” firms, are organized as pass-through entities, according to the nonpartisan Tax Foundation think tank. Rather than operating like corporations with shareholders, as many large companies do, these businesses pass profits through to their owners as personal income.

“The pass-through deduction is an important tax cut for small- and mid-size businesses, reducing their effective tax rates to their lowest levels since the 1930s,” said Treasury Secretary Steven Mnuchin.

“This 20-percent deduction will lead to more investment in U.S. companies and higher wages for hardworking Americans.”

Trump’s tax overhaul provided permanent tax relief to corporations, which saw their tax rate slashed from 35 percent to 21 percent and an end to U.S. taxes on much of their foreign profits.

Pass-through owners got only temporary relief under the law’s individual tax provisions, which are due to expire after 2025. The deduction is currently set to cost the Treasury $415 billion in tax revenues over the next decade.

Republicans in the House of Representatives are expected to consider legislation to make individual tax cuts permanent, with a vote possible ahead of the Nov. 6 congressional midterm elections. But such a measure is not expected to become law anytime soon.

The regulations provide the deduction to a wide range of businesses by limiting a tax code provision that could otherwise deny the benefit to any businesses based principally on the skill or reputation of owners or employees, analysts said. The rules say the limitation applies narrowly to income from product endorsements, royalties and licensing fees.

“They left a lot of winners, which may be expensive,” said Steven Rosenthal, senior fellow at the nonpartisan Tax Policy Center think tank.

Howard Wagner, a partner with the accounting and consulting firm Crowe LLP, said the new rules should also provide welcome flexibility for owners of multiple businesses and settle lingering uncertainties about the kinds of firms that qualify for the deduction.

The proposed regulations are intended to ensure that business owners receive the full deduction on business income up to a $315,000 threshold for married couples and $157,500 for single filers. The deduction is limited for higher income.

Specific industries including healthcare, law, accounting and consulting do not qualify. But others, such as the real estate industry where Trump and his family have business holdings, receive the benefit, as do architects and engineers.

Analysts have warned that wealthy taxpayers could try to seize the full deduction improperly by declaring themselves as contractors or splitting off a restricted firm’s non-restricted income into a separate entity.

Treasury officials said the new regulations include anti-abuse safeguards to prevent such schemes.