QBI Deduction Calculator 2025
Calculate your Section 199A Qualified Business Income deduction
Calculate Your QBI Deduction
Entity type affects how QBI is calculated
Your total taxable income from all sources
Net profit from your business
Your salary from the S-Corporation
Total wages to all employees (not including yourself if S-Corp)
Original cost of depreciable business property
Your QBI Deduction Analysis
QBI Deduction by Entity Type: Real Examples
See how entity choice impacts your QBI deduction with these real-world scenarios:
| Scenario | Sole Prop/LLC | S-Corporation | Partnership | Best Choice |
|---|---|---|---|---|
| $100K Income Below threshold |
$20,000 QBI Full deduction |
$10,000 QBI (after $50K salary) |
$20,000 QBI Full deduction |
LLC/Partnership |
| $300K Income Above threshold |
$60,000 QBI May be limited |
$40,000 QBI Wage test met |
$60,000 QBI May be limited |
S-Corp (if wages sufficient) |
| $500K SSTB Professional service |
$0 QBI Fully phased out |
$0 QBI Fully phased out |
$0 QBI Fully phased out |
Consider C-Corp |
| $150K + Property Capital intensive |
$30,000 QBI Full deduction |
$20,000 QBI Property helps limit |
$30,000 QBI Full deduction |
LLC/Partnership |
💡 Key Takeaways
- Below income thresholds, simpler entities (LLC/Partnership) maximize QBI
- Above thresholds, S-Corps help meet wage limitations
- SSTB owners face complete phase-out at high incomes
- Capital-intensive businesses benefit from property basis calculations
Frequently Asked Questions
What is the QBI deduction?
The Qualified Business Income (QBI) deduction allows eligible business owners to deduct up to 20% of their qualified business income from pass-through entities. This includes income from sole proprietorships, partnerships, S-corporations, and some trusts and estates. The deduction is claimed on your personal tax return and can significantly reduce your taxable income.
Who qualifies for the QBI deduction?
Most business owners with pass-through income qualify for some level of QBI deduction. This includes sole proprietors, partners in partnerships, S-corporation shareholders, and LLC members. The deduction amount depends on your total taxable income, type of business (general vs. specified service), W-2 wages paid, and qualified property owned. Learn more in our detailed guide.
How does the QBI deduction work for S-Corps?
For S-Corporation shareholders, QBI equals the net business income minus W-2 wages paid to the shareholder-employee. While this reduces the QBI amount, the W-2 wages help meet the wage limitation test for high-income taxpayers. Finding the optimal salary/distribution mix is crucial for maximizing the overall tax benefit. See our S-Corp tax guide for strategies.
What are specified service trades or businesses (SSTB)?
SSTBs include businesses in health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing, and any business where the principal asset is the reputation or skill of employees. SSTB owners face phase-out of the QBI deduction starting at $197,300 (single) or $394,600 (married filing jointly) in 2025.
Is the QBI deduction permanent?
Yes! The QBI deduction under Section 199A was made permanent by the One Big Beautiful Bill Act signed on July 4, 2025. Originally scheduled to expire at the end of 2025, the deduction is now a permanent part of the tax code. Additionally, starting in 2026, there's a new $400 minimum deduction for taxpayers with at least $1,000 of QBI who materially participate in their business.
What are the income thresholds for 2025?
For 2025, the taxable income thresholds are:
• Single/Head of Household: $197,300 (phase-out begins) to $247,300 (fully phased out)
• Married Filing Jointly: $394,600 (phase-out begins) to $494,600 (fully phased out)
• Married Filing Separately: $197,300 to $247,300
Below these thresholds, you get the full 20% deduction. Above them, limitations and phase-outs apply.
How accurate is this calculator?
This calculator provides estimates based on current tax law and common scenarios. Actual QBI deductions can vary based on numerous factors including state taxes, other deductions, alternative minimum tax, and specific business circumstances. Always consult with a qualified CPA for personalized calculations and tax planning strategies.
QBI Optimization Strategies
Maximize your QBI deduction with these proven strategies
📊 For Business Owners Below Income Thresholds
- Maximize QBI Defer expenses to next year to increase current year QBI. Consider accelerating revenue recognition before year-end.
- Entity Choice Consider LLC or Partnership structure for maximum QBI without wage limitations.
- Retirement Contributions Make maximum retirement contributions to reduce taxable income and stay below thresholds.
💼 For High-Income Business Owners
- S-Corp Optimization Balance W-2 wages vs. distributions. Higher wages reduce QBI but help meet wage limitation tests.
- Strategic Hiring Increase W-2 wages to employees to improve wage limitation calculations. Consider hiring family members.
- Property Investment Purchase depreciable business property to benefit from the 2.5% property basis alternative.
- Income Timing Consider deferring income or accelerating expenses to stay within phase-out ranges.
🏢 For Specified Service Businesses (SSTB)
- Business Restructuring Separate non-SSTB activities into a different entity to preserve some QBI deduction.
- Income Management Aggressively manage taxable income to stay below $197,300/$394,600 thresholds.
- Alternative Structures Consider C-Corporation election if income consistently exceeds phase-out thresholds.
⚠️ Important Considerations
- QBI deduction is now permanent - plan for long-term optimization
- Starting 2026: New $400 minimum deduction available
- State taxes may affect overall strategy effectiveness
- Always consult with a qualified tax professional before implementing strategies
Need Professional QBI Optimization?
Our CPAs can help you maximize your permanent QBI deduction and implement tax-saving strategies.
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📚 QBI Deduction Guide
Comprehensive guide covering all aspects of the QBI deduction, including detailed examples and planning strategies.
Read Complete Guide →🏢 S-Corporation Tax Guide
Learn how S-Corps interact with QBI deduction and optimize your salary vs. distribution strategy.
S-Corp Strategies →🤝 Partnership Tax Guide
Understand how partnerships qualify for QBI deduction and special allocation considerations.
Partnership Guide →Maximize Your Permanent QBI Deduction
With the QBI deduction now permanent, it's more important than ever to optimize your tax strategy.
✅ Entity structure optimization
✅ Wage vs. distribution planning
✅ Income threshold management
✅ New $400 minimum deduction (2026)
Our CPAs specialize in maximizing the 20% QBI deduction for business owners like you.
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