QBI Deduction Calculator
Calculate your Section 199A Qualified Business Income deduction. Get up to 20% off your pass-through business income. Updated for 2025-2026 with permanent QBI rules.
Your total taxable income from all sources
Net profit from your pass-through business
QBI Deduction
$20,000
20.0% of QBI
Estimated Tax Savings
$4,800
At 24% marginal rate
Calculation Breakdown
Your Income Status
Below Threshold - Full Deduction
Your taxable income ($150,000) is below the $197,300 threshold. You get the simple 20% QBI deduction.
2025 Thresholds (SINGLE)
Full deduction: Below $197,300
Phase-out range: $197,300 - $247,300
Above threshold: Over $247,300
Who Qualifies for the QBI Deduction?
Sole Proprietors
Schedule C filers
S-Corp Owners
K-1 income from S-Corps
Partners
Partnership K-1 income
LLC Members
Single or multi-member LLCs
Who Does NOT Qualify
- ✕ W-2 employees
- ✕ C-Corporation owners
- ✕ Income from C-Corp wages/dividends
What is Qualified Business Income?
- Net profit from business operations
- Ordinary income (not capital gains)
- US-sourced income
What is an SSTB?
Specified Service Trade or Business (SSTB) is a category of businesses where the QBI deduction phases out at higher income levels.
- • Health (doctors, dentists, nurses)
- • Law (attorneys, paralegals)
- • Accounting (CPAs, bookkeepers)
- • Actuarial science
- • Performing arts
- • Consulting
- • Athletics
- • Financial services
- • Brokerage services
- • Investment management
- • Engineering
- • Architecture
- • Real estate agents/brokers
- • Insurance agents
- • Manufacturing
- • Retail
- • Construction
- • Food services
- • Transportation
How the QBI Deduction Works
Below Threshold (Simple Calculation)
If taxable income is below $197,300 (single) or $394,600 (married):
QBI Deduction = Lesser of (20% × QBI) or (20% × Taxable Income)In Phase-Out Range
Income between threshold and threshold + $50K (single) / $100K (married):
- • W-2 wages and UBIA limitations gradually phase in
- • SSTB deduction gradually phases out to zero
Above Threshold
Income above $247,300 (single) or $494,600 (married):
Non-SSTB businesses:
QBI Deduction = Lesser of 20% QBI or Greater of:
(50% × W-2 Wages) OR (25% × W-2 Wages + 2.5% × UBIA)SSTB businesses:
No QBI deduction available2025-2026 QBI Updates
QBI Deduction is Now Permanent!
The One Big Beautiful Bill Act (July 4, 2025) made the Section 199A QBI deduction permanent. Previously set to expire after 2025, pass-through business owners can now rely on this 20% deduction indefinitely.
- Permanent 20% deduction for pass-through income
- New $400 minimum deduction starting 2026 for qualifying low-income taxpayers
- Thresholds adjust annually for inflation
Official IRS References
- IRS: Qualified Business Income Deduction Overview
Official IRS guidance on Section 199A
- IRS Form 8995: Qualified Business Income Deduction Simplified Computation
For taxpayers with income below threshold
- IRS Form 8995-A: Qualified Business Income Deduction
For taxpayers with income above threshold or SSTBs
This calculator provides estimates for educational purposes only. Actual deductions depend on your specific tax situation, aggregation elections, and other factors. Consult a qualified tax professional for personalized advice.