About the QBI Deduction Calculator
This QBI deduction calculator estimates the Section 199A qualified business income deduction for tax year 2026. Owners of sole proprietorships, single-member LLCs, partnerships and S corporations can deduct up to 20% of their qualified business income, which lowers income tax (but not self-employment tax). The One Big Beautiful Bill Act made the deduction permanent, widened the phase-in ranges and added a $400 minimum deduction from 2026.
Below the 2026 threshold — $201,750 of taxable income ($403,500 married filing jointly, $201,775 married filing separately) — the deduction is simply 20% of QBI, capped at 20% of taxable income minus net capital gain. Above the threshold, two limits phase in over the next $75,000 ($150,000 joint): the W-2 wage and property limit (the greater of 50% of W-2 wages, or 25% of wages plus 2.5% of the unadjusted basis of qualified property), and, for a specified service trade or business (SSTB) such as law, health, consulting or financial services, a gradual loss of the deduction altogether.
Use it for one business. If you own several, each one’s limits are worked out separately and then combined on Form 8995-A, and losses from one business reduce QBI from the others. REIT dividends and publicly traded partnership income (which get their own 20% component) and loss carryforwards are not modeled.
With the default inputs, the qbi deduction is $24,000.00. Change any value above to recalculate instantly.
How to use the qbi deduction calculator
- 1Choose your filing status.
- 2Enter your qualified business income and taxable income before the QBI deduction.
- 3Add any net capital gain or qualified dividends, which reduce the income cap.
- 4If you are above the threshold, enter W-2 wages paid and the UBIA of business property.
- 5Turn on SSTB if your business is a specified service such as consulting, law or health.
- 6Read the deduction and see which limit is binding in the chart.
Formula and method
Below the threshold the QBI component is 20% of qualified business income. Inside the phase-in range the excess of 20% of QBI over the wage/property limit is reduced in proportion to how far taxable income is into the range: reduction = (20% QBI − limit) × (TI − threshold) ÷ range. Above the range the component is the lesser of 20% of QBI and the wage/property limit.
For a specified service trade or business, QBI, W-2 wages and UBIA are first multiplied by an applicable percentage of 1 − (TI − threshold) ÷ range, so the deduction disappears entirely above the range. The final deduction can never exceed 20% of taxable income minus net capital gain. From 2026 a taxpayer with at least $1,000 of QBI from businesses in which they materially participate gets at least $400. Figures: Rev. Proc. 2025-32 §4.26 (threshold $201,750; $403,500 joint; $201,775 separate) with $75,000 / $150,000 phase-in ranges.
- TI
- Taxable income before the QBI deduction
- NCG
- Net capital gain plus qualified dividends
- W
- W-2 wages paid by the business
- U
- Unadjusted basis immediately after acquisition (UBIA) of qualified property
Worked examples
Freelancer below the threshold
With $140,000 of taxable income, a single filer is well under the $201,750 threshold, so the deduction is simply 20% × $120,000 = $24,000. The income cap is 20% × $140,000 = $28,000, which does not bind. At the 24% bracket that saves about $5,760.
Consultant (SSTB) halfway through the phase-in range
Taxable income of $239,250 is $37,500 into the $75,000 range, so the applicable percentage is 50%. Only $100,000 of QBI counts, 20% of which is $20,000. With no W-2 wages the wage limit is $0, so the phase-in then removes 50% of the $20,000 excess, leaving a $10,000 deduction — the SSTB rule and the wage limit both bite inside the range.
Married owner above the range with equipment-heavy business
At $650,000 the couple is above the $553,500 top of the joint range, so the full limit applies. 50% of $100,000 wages is $50,000, but 25% of wages ($25,000) plus 2.5% of $2,000,000 of property ($50,000) is $75,000, and the larger figure is used. 20% of QBI would be $100,000, so the deduction is capped at $75,000.
Frequently asked questions
What is the QBI deduction?+
Section 199A lets owners of pass-through businesses — sole proprietors, partners, LLC members and S corporation shareholders — deduct up to 20% of qualified business income. It reduces taxable income but not adjusted gross income or self-employment tax.
What are the 2026 QBI thresholds?+
For 2026 the threshold is $201,750 of taxable income for single and head-of-household filers, $201,775 for married filing separately and $403,500 for married filing jointly. The limits phase in over the next $75,000 ($150,000 joint).
Is the QBI deduction permanent?+
Yes. It was due to expire after 2025, but the One Big Beautiful Bill Act made it permanent, kept the 20% rate, widened the phase-in ranges and added a $400 minimum deduction for active owners with at least $1,000 of QBI from 2026.
What counts as a specified service trade or business?+
SSTBs include health, law, accounting, actuarial science, performing arts, consulting, athletics, financial and brokerage services, investing and trading, and any business whose main asset is the reputation or skill of its owners or employees. Engineering and architecture are excluded.
Do I need employees to get the QBI deduction?+
Not below the threshold. Above it, the deduction is limited by W-2 wages paid and the basis of business property, so a high-earning owner with no payroll and little equipment can lose some or all of it.
Is rental income eligible for the QBI deduction?+
Rental real estate qualifies when it rises to the level of a trade or business. IRS Rev. Proc. 2019-38 gives a safe harbor that generally requires 250 or more hours of rental services a year and separate books.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.