QBI Deduction Calculator
Calculate your Qualified Business Income deduction (up to 20%). Handles SSTB phase-outs, W-2 wage limits, UBIA property limits, and the $400 minimum deduction.
QBI Inputs
QBI Deduction Results
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How the QBI Deduction Works
The Qualified Business Income (QBI) deduction, established under Section 199A, allows eligible self-employed individuals and pass-through business owners to deduct up to 20% of their qualified business income from federal taxable income.
20% Deduction Rate
The base QBI deduction is 20% of qualified business income. For businesses with taxable income above the threshold, the deduction may be limited by W-2 wage and UBIA property factors.
2026 Income Thresholds
Single/HoH: $201,750 (phase-in to $276,750). MFJ: $403,500 (phase-in to $553,500). MFS: $201,775 (phase-in to $276,775). Below the threshold, the full 20% applies with no wage limits.
SSTB Phase-Out
Specified Service Trades or Businesses (health, law, consulting, etc.) face a linear phase-out of the QBI deduction within the phase-in range. Above the upper limit, SSTBs receive no QBI deduction at all.
$400 Minimum Deduction
Under the OBBBA, businesses with material participation and qualified QBI of at least $1,000 receive a minimum $400 QBI deduction, even if the 20% calculation or wage/UBIA limits would produce a lower amount. This minimum is not re-capped by the 20% taxable income limit.
Wage and Property Limits (Above Threshold)
- W-2 Wage Limit: 50% of business W-2 wages
- Combined Limit: 25% of W-2 wages + 2.5% of UBIA property
- Applicable Limit: The greater of the two limits above
- Final Deduction: The lesser of 20% of QBI or the applicable limit
Frequently Asked Questions
What is the QBI deduction?
The QBI deduction allows eligible businesses to deduct up to 20% of qualified business income from federal taxable income. For 2026, the full deduction is available below $201,750 (single) or $403,500 (MFJ). Above these thresholds, W-2 wage and UBIA property limits may reduce the deduction. SSTB businesses lose the deduction entirely above the phase-in limit.
What is an SSTB business?
SSTB (Specified Service Trade or Business) includes businesses in health, law, accounting, actuarial science, performing arts, consulting, financial services, investing, brokerage, trading, and any business where the principal asset is the reputation or skill of its employees. Engineering, architecture, and research are explicitly excluded from SSTB.
What is the $400 minimum QBI deduction?
Under the One Big Beautiful Bill Act (OBBBA), qualifying low-income businesses receive a minimum $400 QBI deduction. To qualify, you must materially participate in the business and have post-SSTB qualified QBI of at least $1,000. This minimum applies even when the normal 20% calculation or wage/UBIA limits would produce a smaller deduction, and it is not re-capped by the 20% taxable income limit.
How do W-2 wage limits work?
Above the income threshold, the QBI deduction is limited to the greater of: (1) 50% of W-2 wages paid by the business, or (2) 25% of W-2 wages plus 2.5% of the unadjusted basis of qualified property (UBIA). For sole proprietors with no employees and no significant property, the deduction may be significantly reduced or eliminated above the threshold.