QBI Deduction Calculator
Estimate your 20 percent Section 199A qualified business income deduction, with the 2026 thresholds, wage limit, and SSTB phase-out.
Want to understand the concept, not just the number? Read The Self-Employed Retirement Guide .
How it's calculated
The qualified business income deduction, from Section 199A, lets most owners of pass-through businesses, meaning sole proprietors, partnerships, and S corporations, deduct up to 20 percent of their business income. It is a rare deduction you get on top of the standard deduction, and for many self-employed people it is the single largest break they claim.
Below an income threshold the rule is simple. Take the default. With $100,000 of qualified business income and $150,000 of total taxable income, you are under the 2026 single threshold of $201,750, so the deduction is a flat 20 percent of the business income, which is $20,000. There is one guardrail even here. The deduction cannot exceed 20 percent of your taxable income minus net capital gains, which at $150,000 of income is $30,000, comfortably above the $20,000, so the full amount stands. Your taxable income drops to $130,000.
Above the threshold, which is $201,750 for single filers and $403,500 for joint filers in 2026, the rules tighten. For a regular business, the deduction becomes limited to 50 percent of the W-2 wages the business pays, which phases in over the next $75,000 of income for single filers, or $150,000 for joint filers. For a specified service business, like health, law, accounting, or consulting, the deduction phases out entirely across that same range and reaches zero above it. This calculator applies the simple 20 percent below the threshold and the wage or service-business limits above it, so high earners can see how much of the deduction survives.
Assumptions
- Below the income threshold the deduction is 20 percent of QBI, capped at 20 percent of taxable income minus net capital gains. The 2026 threshold is 201,750 single and 403,500 married filing jointly.
- Above the threshold the 50 percent W-2 wage limit phases in for a regular business, and a specified service business phases out to zero. The 2.5 percent property (UBIA) alternative to the wage limit is not modeled.
Last updated: 2026-08-08 · Tax year 2026
These assumptions follow our general methodology.
Frequently asked questions
Who qualifies for the QBI deduction?
Owners of pass-through businesses, including sole proprietors, partnerships, S corporations, and many LLCs, can claim it on their qualified business income. Wages from a job and most investment income do not count. Below the income threshold, nearly all pass-through owners get the full 20 percent.
What is the 2026 income threshold for the QBI deduction?
For 2026, the taxable-income threshold where the limits begin is $201,750 for single filers and $403,500 for married couples filing jointly, per Rev. Proc. 2025-32. The limits then phase in over the next $75,000 of income for single filers and $150,000 for joint filers.
What is a specified service trade or business?
An SSTB is a business in a field like health, law, accounting, consulting, athletics, financial services, or one that relies on the reputation or skill of its owners. SSTBs keep the full deduction below the threshold, but it phases out completely once income rises above the phase-in range.
Why is my deduction limited by W-2 wages?
Above the income threshold, a regular business can only deduct up to 50 percent of the W-2 wages it pays, which is meant to tie the break to real business activity. A sole proprietor with no employees and no wages can lose the deduction at high income unless the business pays wages.