The pass-through deduction, which expires after 2025, is part of the broader package signed by Trump that cuts individual tax rates, nearly doubles the standard deduction and lowers the corporate rate to 21 percent. The break costs more than $414 billion over a decade -- almost a third of the $1.5 trillion law.

Pass-throughs -- which include S corporations and sole proprietorships -- don’t pay taxes themselves. Instead, they pass profits to their owners, who then pay taxes at individual rates. The new law lowers the top individual rate to 37 percent from 39.6 percent. With the new 20 percent deduction, pass-through owners taxed at the top rate can now get their rates as low as 29.6 percent.

Critics say this creates an incentive for top earners to recast themselves as independent contractors and funnel wages taxed at ordinary rates through a pass-through entity.

Gross Income

Now, tax advisers are exploring another move: to recast a pass-through as a cooperative, because the new law lets cooperatives apply the deduction to their gross income. By contrast, pass-throughs can only apply the break to net taxable income, which is gross income minus expenses and the like.

The new law sets income limits on the deduction for high earners in health, law and service professions such as financial services, consulting and performing arts. But those limits apply only to pass-throughs -- not cooperatives.

The law starts phasing out the pass-through deduction once the net income of an owner in one of those professional fields hits $157,500, or $315,000 for joint filers. Once their income hits $207,500 -- $415,000 for joint filers -- the deduction disappears altogether.

Pass-through owners who aren’t in those fields but who earn above those initial limits -- think of a booming contractor in Greenwich, Connecticut -- can continue to use the deduction if they pay certain levels of wages or invest in real estate. Engineering and architectural firms were hit by the phase-out in early bill drafts but later exempted.

Here’s an example of how it could work. A group of plastic surgeons making millions of dollars a year could set themselves up as a cooperative and pay themselves via dividends on their gross income, saving far more than if they continued to operate as an S corporation.

‘Lucrative Avenue’