Who qualifies for the QBI deduction?

Owners of pass-through businesses — sole proprietors, single-member LLCs, multi-member LLCs/partnerships, and S-corps — with qualified business income from a U.S. trade or business. C-corp shareholders do NOT qualify; C-corp dividends are not QBI.

A 'specified service trade or business' under Section 199A: health, law, accounting, actuarial, performing arts, consulting, athletics, financial services, brokerage, investing/investment management, and any trade where the principal asset is the reputation or skill of an owner. SSTB owners phase out of the QBI deduction above the income thresholds.

What are the income thresholds?

Approximate 2026 thresholds: $241,950 (single) / $483,900 (married filing jointly). Below: full 20% deduction regardless of SSTB. Phase-in range: $50,000 (single) / $100,000 (MFJ). Above: SSTBs lose the deduction entirely; non-SSTBs are limited by W-2 wages and UBIA of qualified property.

Does the calculator handle the W-2 wage and UBIA limits?

No — for simplicity. Above the phase-in for non-SSTBs, the deduction is limited to the greater of (a) 50% of W-2 wages paid OR (b) 25% of W-2 wages + 2.5% of UBIA of qualified property. The calculator assumes those limits are satisfied. For an accurate calculation when those limits bind, work with a CPA.

Free Calculator

QBI Deduction Calculator

Section 199A allows up to a 20% deduction on qualified business income. The phase-out for SSTBs above the threshold makes the calculation non-trivial.

Your situation

Section 199A allows up to a 20% deduction on qualified business income from passthroughs. SSTBs (specified service trades) phase out above the income thresholds.

Qualified business income (QBI)$150,000

Taxable income (before QBI deduction)$220,000

Married filing jointlyBusiness is a specified service trade (SSTB) — law, health, consulting, finance, etc.

Estimated QBI deduction

$30,000

Section 199A deduction allowed against taxable income

Pre-phaseout (20% of QBI)$30,000

Income zoneBelow threshold — full deduction

Allowed QBI deduction$30,000

Read this carefully

Directional only. Above the threshold for non-SSTBs, the deduction is limited by W-2 wages and UBIA of qualified property — not modeled here. REIT/PTP income, aggregation elections, and net loss carryovers also matter. Talk to a partner.

QBI interacts with the S-corp decision

S-corp owners often lose part of their QBI deduction because the wage they pay themselves reduces QBI. The S-corp savings can still exceed the QBI loss — but the right answer requires modeling both at the same time.

See S-Corp Savings Calculator Talk to a partner