QBI Calculator for 2025 & 2026 Tax Years
Free QBI Calculator: Estimate Your Section 199A Deduction
This QBI calculator estimates your Section 199A qualified business income deduction. Enter your business income, select your entity type, and see your potential 20% deduction. The QBI deduction can reduce taxable income by up to 20% for pass-through business owners.
📚 New to QBI? Read our Complete QBI Guide | S-Corp Tax Guide | Partnership Tax Guide
What is the QBI deduction and how much can you save?
The QBI deduction (Section 199A) lets pass-through business owners deduct up to 20% of qualified business income from their federal taxes. For a business earning $200,000 in QBI, that’s a potential $40,000 deduction. The One Big Beautiful Bill Act (July 2025) made this deduction permanent and added a $400 minimum deduction starting 2026. Your actual deduction depends on your entity type (S-Corp, partnership, sole proprietorship), total taxable income, W-2 wages paid, and whether your business is classified as a Specified Service Trade or Business (SSTB). Below $201,775 single / $403,500 married (2026), most business owners get the full 20%. Above those thresholds, wage and property limitations apply.
Key Takeaways
- QBI deduction is now permanent – One Big Beautiful Bill Act (July 2025) eliminated the 2025 sunset. New $400 minimum deduction starts 2026.
- 20% deduction on pass-through income – Applies to sole proprietors, S-Corp shareholders, and partners. Reduces taxable income, not tax directly.
- Income thresholds trigger limitations – Below $201,775 single / $403,500 married (2026), you typically get the full deduction. Above that, W-2 wages and property basis matter.
- SSTB businesses face phase-out – Doctors, lawyers, accountants, consultants, and financial advisors lose the deduction entirely above the upper threshold ($276,775 / $553,500 for 2026).
- S-Corp salary affects your QBI – Lower reasonable salary means more QBI. But for high earners, W-2 wages become the limiting factor. Balance matters.
- Entity type changes the math – S-Corps exclude owner salary from QBI. Partnerships include guaranteed payments differently. Use the calculator below to compare.
Calculate Your QBI Deduction
Select the tax year you’re calculating for
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 Estimated QBI Deduction Analysis*
⚠️ QBI Calculator Disclaimer
*This QBI calculator provides estimates for educational purposes only. Actual deductions depend on IRS Section 199A rules, aggregation elections, other income sources, and your specific tax situation. Results may not reflect your actual deduction. Consult a qualified CPA before making tax decisions. Get Started for personalized analysis.
How This QBI Calculator Works
This calculator estimates your Section 199A qualified business income deduction by applying IRS rules to your specific situation. Here’s what it calculates:
- Basic 20% calculation: Takes your QBI and calculates 20% as the starting point for the deduction.
- S-Corp adjustment: For S-Corp owners, subtracts your W-2 salary from business income since reasonable compensation isn’t QBI.
- Wage limitation: Above income thresholds, limits the deduction to the greater of 50% of W-2 wages OR 25% of wages + 2.5% of property basis.
- SSTB phase-out: For service businesses, phases out the entire deduction between the threshold amounts based on your taxable income.
- Taxable income cap: Your QBI deduction can’t exceed 20% of your total taxable income (minus capital gains).
For the complete breakdown of Section 199A rules, see our comprehensive QBI deduction guide.
2025 vs 2026 QBI Income Thresholds
The QBI deduction phases out differently depending on your filing status and business type. 2026 thresholds per IRS Rev. Proc. 2025-32. The One Big Beautiful Bill Act expanded the 2026 phase-out window to $75,000 (single) / $150,000 (MFJ).
| Filing Status | 2025 Phase-Out Start | 2025 Full Phase-Out | 2026 Phase-Out Start | 2026 Full Phase-Out (OBBBA) |
|---|---|---|---|---|
| Single / Head of Household | $197,300 | $247,300 | $201,775 | $276,775 |
| Married Filing Jointly | $394,600 | $494,600 | $403,500 | $553,500 |
| Married Filing Separately | $197,300 | $247,300 | $201,775 | $276,775 |
What Is a Specified Service Trade or Business (SSTB)?
If your business falls into one of these categories, you’ll face additional limitations on the QBI deduction once your income exceeds the threshold amounts.
SSTB (Limited Above Threshold)
- Health care
- Law
- Accounting
- Actuarial science
- Performing arts
- Consulting
- Athletics
- Financial services
- Brokerage
- Investing/trading
Not SSTB (Full QBI Available)
- Engineering
- Architecture
- Real estate
- Construction
- Manufacturing
- Retail/wholesale
- Technology/software
- Restaurants/hospitality
Important Note: Engineering and architecture are specifically excluded from SSTB by statute. Real estate investors and property managers are generally not SSTBs, though real estate brokers may be. Our QBI planning strategies guide covers SSTB optimization tactics.
How QBI Works by Entity Type
Your business structure directly affects how QBI is calculated and what optimization strategies are available.
Sole Prop / LLC
QBI Calculation: QBI equals your Schedule C net profit. Your full profit counts as QBI since there’s no salary split.
Optimization Tip: Consider S-Corp election when net income exceeds $75,000 to optimize both self-employment tax and QBI deduction.
S-Corporation
QBI Calculation: QBI equals your S-Corp income minus your W-2 salary. Lower salary means more QBI, but higher salary helps with the wage limitation above the threshold.
Optimization Tip: The optimal salary balances QBI deduction against self-employment tax savings. Our S-Corp tax planning includes this analysis.
Partnership
QBI Calculation: QBI equals your K-1 share of partnership income. Guaranteed payments are generally excluded from QBI but count toward the wage limitation.
Optimization Tip: Partners in multiple businesses can aggregate qualifying trades under Section 199A(b)(1) to maximize the wage/property limitation.
QBI Deduction Examples: 4 Common Scenarios
All examples use 2026 verified thresholds ($201,775 single / $403,500 MFJ) per IRS Rev. Proc. 2025-32. Expand each scenario to see the full calculation.
QBI Calculator Example: Sole Proprietor
Scenario: Schedule C net profit $120,000. Single filer. Taxable income $95,000.
- QBI: $120,000 (full Schedule C profit counts as QBI)
- Below threshold? Yes, $95,000 < $201,775 (2026 single). No wage limitation applies.
- 20% deduction: $120,000 × 20% = $24,000
- Tax savings: $24,000 × 22% bracket = ~$5,280 in federal tax saved
No limitations apply below the threshold. The deduction reduces taxable income directly, from $95,000 to $71,000 in this example.
See our Schedule C instructions guide for maximizing sole proprietor deductions.
QBI Calculator Example: S-Corp Owner
Scenario: S-Corp gross revenue $260,000. W-2 salary paid to owner $80,000. K-1 Box 1 net income $180,000. MFJ taxable income $240,000.
- QBI: $180,000 (K-1 net income; salary is excluded from QBI by definition)
- Below threshold? Yes, $240,000 < $403,500 (2026 MFJ). No wage limitation.
- 20% deduction: $180,000 × 20% = $36,000
Key insight: Your salary/distribution balance matters. A lower W-2 salary increases QBI and the deduction, but if income exceeds $403,500, higher wages become your only protection against the wage limitation. The optimal split depends on your total taxable income.
Compare your S-Corp tax savings to see how salary changes affect your total tax burden.
QBI Calculator Example: Partnership (Above Threshold, Wage Limitation)
Scenario: Partner’s K-1 income $500,000. MFJ taxable income $550,000. Partnership paid $80,000 in W-2 wages to employees. UBIA of qualified property $100,000.
- QBI: $500,000
- Above threshold? Yes, $550,000 > $403,500 (2026 MFJ). Wage limitation applies fully.
- Unrestricted deduction: $500,000 × 20% = $100,000
- Wage limitation (calculate both methods):
- Method A: 50% × $80,000 wages = $40,000
- Method B: (25% × $80,000) + (2.5% × $100,000) = $20,000 + $2,500 = $22,500
- Use the greater: $40,000
- Deduction capped at: $40,000, not the full $100,000
- Lost deduction: $60,000. That’s the direct cost of insufficient W-2 wages
To recover the full $100,000 deduction, the partnership would need $200,000 in W-2 wages (50% × $200,000 = $100,000). This example shows why high-income partners need to model W-2 wages carefully before year-end.
QBI Calculator Example: SSTB Physician (Phase-Out Range)
Scenario: Physician with professional S-Corp. K-1 income $230,000. MFJ taxable income $430,000. SSTB designation applies (health care is an SSTB).
- Phase-out range (2026 MFJ): $403,500 – $553,500 (per OBBBA expanded $150,000 window)
- In phase-out range? Yes, $430,000 is between $403,500 and $553,500
- Phase-out percentage: ($430,000 – $403,500) ÷ $150,000 = 17.67% phased out
- Remaining SSTB eligibility: 82.33%
- Unrestricted deduction: $230,000 × 20% = $46,000
- Deduction after SSTB phase-out: $46,000 × 82.33% ≈ $37,870
At $553,500 (MFJ upper threshold), the SSTB deduction is $0. A $124,000 retirement contribution reducing taxable income from $430,000 to $306,000 would restore the full $46,000 deduction. This is why income planning — retirement accounts, timing, and entity structure — is critical for physicians, attorneys, and consultants.
Illustrative examples based on common client profiles. Actual deductions vary based on your income, entity structure, and state. Consult a tax professional for your specific situation.
Frequently Asked Questions
What is the $400 minimum QBI deduction in 2026?
Starting in 2026, the One Big Beautiful Bill Act added a $400 minimum QBI deduction under Section 199A(a)(2). If your qualified business income is at least $1,000 and you materially participate in the business, you receive at least $400, even if the standard 20% calculation produces less due to SSTB phase-outs, wage limitations, or other factors. This protects small business owners with modest QBI amounts who would otherwise lose the deduction entirely.
Note: The calculator above does not yet model the $400 minimum. If your result is $0 but you meet the material participation and $1,000 QBI requirements, consult a tax professional about the minimum deduction.
What is the QBI deduction?
The QBI deduction (Section 199A) allows eligible business owners to deduct up to 20% of qualified business income from pass-through entities including sole proprietorships, partnerships, S-corporations, and some trusts. The One Big Beautiful Bill Act (July 2025) made this deduction permanent and added a $400 minimum deduction starting in 2026. Read our complete QBI deduction guide for details.
What are the QBI income thresholds for 2025 and 2026?
For 2025, QBI phase-out begins at $197,300 (single) or $394,600 (married filing jointly), with full phase-out at $247,300/$494,600. For 2026, thresholds are $201,775 (single) or $403,500 (married filing jointly) per IRS Rev. Proc. 2025-32. The One Big Beautiful Bill Act expanded the phase-out window to $75,000 (single) and $150,000 (MFJ), so full phase-out reaches $276,775/$553,500 in 2026. Below the starting threshold, most taxpayers receive the full 20% deduction regardless of wages paid or property owned.
What is a Specified Service Trade or Business (SSTB)?
SSTBs include businesses in health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage, and investing/trading. Engineering and architecture are specifically excluded from SSTB classification. SSTB owners face complete phase-out of the QBI deduction once taxable income exceeds the upper threshold. See our QBI planning strategies for optimization tactics.
How does the QBI deduction work for S-Corp owners?
For S-Corp owners, QBI equals your share of S-Corp income minus your W-2 reasonable salary. A lower salary increases QBI but also affects the wage limitation for higher-income taxpayers. The optimal balance depends on your total taxable income, whether you’re above or below the phase-out threshold, and your W-2 wages paid to all employees. Our S-Corp tax services include reasonable salary analysis.
How does the QBI deduction work for partnerships?
Each partner calculates QBI separately based on their share of partnership income reported on Schedule K-1. The wage and property limitations apply at the partner level using the partner’s share of the partnership’s W-2 wages and qualified property. Partners in multiple partnerships can aggregate qualifying businesses under certain conditions. Learn more about partnership tax services.
What is the W-2 wage limitation?
Above the income threshold, your QBI deduction is limited to the greater of: (a) 50% of W-2 wages paid by the business, or (b) 25% of W-2 wages plus 2.5% of the unadjusted basis of qualified property. This limitation phases in between the lower and upper thresholds. Below the lower threshold, there’s no wage limitation. The calculator above applies these limits automatically.
How do I calculate my QBI deduction?
To calculate your QBI deduction: (1) Determine your QBI: net profit from your pass-through business, adjusted for reasonable compensation. (2) Calculate 20% of QBI. (3) If your 2026 taxable income is below $201,775 (single) or $403,500 (MFJ), that’s your deduction, subject to the 20% taxable income cap. (4) Above those thresholds, apply the W-2 wage limitation: the greater of 50% of W-2 wages or 25% of wages plus 2.5% of qualified property basis. (5) SSTB owners phase out proportionally between $201,775–$276,775 (single) or $403,500–$553,500 (MFJ). Use the calculator above for your specific situation.
What income qualifies for the QBI deduction?
Qualified business income includes net income from sole proprietorships (Schedule C), S-corporation income reported on K-1 Box 1, and partnership income from K-1. It does NOT include W-2 wages you pay yourself, investment income (dividends, capital gains, interest), guaranteed payments from partnerships, or income from C corporations. Rental income may qualify if it rises to the level of a trade or business. The IRS Safe Harbor (Rev. Proc. 2019-38) provides a structured path for landlords to qualify. Our QBI deduction guide covers all qualifying income types.
Can I get the QBI deduction if I have W-2 income?
Yes. W-2 income from an employer doesn’t disqualify you from the QBI deduction. What matters is whether you also have income from a pass-through business (sole proprietorship, S-Corp, or partnership). Your W-2 wages and business income are separate for the deduction calculation. However, W-2 income counts toward your total taxable income, which determines whether you’re above or below the 2026 phase-out thresholds ($201,775 single or $403,500 MFJ). If combined taxable income exceeds those levels, the wage and property limitations apply to your business deduction.
Does rental income qualify for QBI?
Rental income may qualify for the QBI deduction, but only if the rental activity rises to the level of a trade or business under Section 199A. Passive investors with minimal involvement generally don’t qualify. The IRS Safe Harbor election (Rev. Proc. 2019-38) provides a clear test: 250+ hours of rental services annually, maintained time logs, and the property isn’t a triple-net lease or personal residence. Qualifying rental income follows the same 20% deduction rules, threshold limits, and potential wage/property limitations as other QBI. Our tax planning services include rental income QBI analysis for real estate investors.
Is the QBI deduction permanent?
Yes. The One Big Beautiful Bill Act (signed July 4, 2025) made the Section 199A QBI deduction permanent. It was originally set to expire after 2025. The Act also added a new $400 minimum QBI deduction for qualifying taxpayers starting in 2026, and restored 100% bonus depreciation which interacts with QBI property basis calculations.
How accurate is this QBI calculator?
This calculator provides estimates based on current Section 199A rules for 2025 and 2026 tax years. It handles the basic 20% calculation, SSTB phase-outs, and wage limitations. However, actual deductions depend on aggregation elections, other income sources, state-specific rules, and your complete tax situation. Consult a qualified CPA for personalized calculations. Get Started with SDO CPA for expert analysis.
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K-1 preparation, partner allocations, and QBI optimization across multiple partners and entities. We handle the complexity so you can focus on growing your business.
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Related Resources
- Complete QBI Deduction Guide – Everything you need to know about Section 199A
- Maximizing QBI for S-Corps – S-Corp specific optimization strategies
- QBI Planning Strategies – Advanced tactics for high earners
- S-Corp Tax Calculator – Compare sole prop vs S-Corp tax savings
- Self-Employment Tax Calculator – Estimate your SE tax liability
- Complete S-Corp Tax Guide – Comprehensive S-Corp resource
- Complete Partnership Tax Guide – Everything about partnership taxation
Important Disclaimer
This calculator and accompanying content are for educational and informational purposes only and do not constitute tax, legal, or financial advice. Results are estimates based on the information you provide and current federal tax rules under IRC Section 199A. Actual deductions depend on your complete tax situation, including state taxes, other income sources, aggregation elections, and IRS regulations that may change. Always consult a qualified tax professional before making decisions based on these calculations. SDO CPA LLC provides this tool as a public resource and assumes no liability for decisions made using it.