Your business info
Net business profit minus SE tax deduction and SE retirement contribution
Phase-out starts at $201,775 (single)
QBI deduction result
$17,000 × 22% bracket = $3,740 saved
| Qualified business income | $85,000 |
| × 20% base QBI amount | $17,000 |
| Income cap (20% of taxable income) | $33,000 |
| 2026 QBI deduction | $17,000 |
What is How to Use the QBI Deduction Calculator?
The Qualified Business Income (QBI) deduction — Section 199A — lets eligible business owners deduct up to 20% of their qualified business income from federal taxable income. It applies to sole proprietors, single-member LLCs, S-corp shareholders, and partnership partners. The One Big Beautiful Bill Act (OBBBA) made it permanent in 2025 and added a $400 minimum deduction starting 2026.
How to Use
- Enter your 2026 qualified business income (net profit from your pass-through business).
- Enter your estimated taxable income (after the standard/itemized deduction, before the QBI deduction itself).
- Indicate whether your business is a Specified Service Trade or Business (SSTB) — this matters above the phase-out threshold.
- If you're above $201,775 (single) / $403,500 (MFJ), enter your W-2 wages and qualified property basis, as the W-2 wage limit may apply.
- Select your tax bracket to see your estimated tax saving from the deduction.
Why Use This Tool?
Tips & Best Practices
- The QBI deduction is taken on the personal return — it is not a business deduction. Your QBI equals net business profit less SE tax deduction and any SE retirement plan contribution.
- If you own an S-corp, reasonable compensation paid to yourself does NOT count as QBI — only the S-corp's remaining distributable profit qualifies.
- Below the phase-out threshold ($201,775 single / $403,500 MFJ), the W-2 wage limit does NOT apply. You get the full 20% regardless of W-2 wages.
- Above the threshold, non-SSTB businesses (e.g., manufacturing, real estate, engineering) can use the W-2 wage limit as an alternative to the pure QBI limit.
- Roth conversions INCREASE taxable income, which can push you deeper into the phase-out range — always model QBI impact before converting.
Frequently Asked Questions
What is the 2026 QBI deduction phase-out range?
For 2026, the phase-out begins at $201,775 (single/HOH) or $403,500 (MFJ) of taxable income. The deduction is fully phased out for SSTBs above $251,775 (single) or $503,500 (MFJ). Non-SSTBs above those thresholds use the W-2 wage limit instead of losing the deduction entirely.
What businesses are excluded from the QBI deduction (SSTBs)?
Specified Service Trades or Businesses include health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, and brokerage services. Above the phase-out range, these businesses get zero QBI deduction. Engineers, architects, real estate rentals, and manufacturers are NOT SSTBs.
What is the new $400 minimum deduction?
New in 2026 under the OBBBA: if you qualify for any QBI deduction but the calculated amount is below $400, it is automatically raised to $400. This ensures that small-business owners with minimal profit still receive a meaningful deduction.
Does the QBI deduction reduce self-employment tax?
No. The QBI deduction reduces your federal income tax but has no effect on self-employment tax. SE tax is computed on net SE income before the QBI deduction.