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Section 199A

QBI Deduction Calculator

Pass-through owners can deduct up to 20% of qualified business income — until one of three limits takes part of it away. This prices the deduction on your own figures and names the limit that is binding, which is the part a rule of thumb cannot tell you.

Health, law, accounting, consulting, athletics, financial and brokerage services, or any business whose main asset is the reputation or skill of its owners. Engineering and architecture are specifically excluded.

Net profit from the pass-through — Schedule C, K-1 or Schedule E. Not wages, not capital gains, not portfolio income.

AGI less your standard or itemized deduction, with the QBI deduction left out. The threshold for this status is $201,750.

Wages on the business's own payroll, including an S-corp owner's salary. Only matters above the threshold.

What the business paid for depreciable property, before §179 or bonus depreciation. Leave at zero if it owns none.

Section 199A, step by step
Full share of qualified business income (20%)
$30,000
Below the threshold — no limits apply
Band runs $201,750 to $276,750 for this status
$21,750 of room
Your QBI deduction
$30,000
Share of qualified business income it came to
20.0%
Federal income tax it saves
Your bill with the deduction against your bill without it — top bracket 24.0%
$7,200
$30,000 deduction, worth $7,200
You are $21,750 below the threshold for this filing status, so neither the specified-service phase-out nor the wage limit applies and the deduction is the full share.
Walkthrough

The three limits, and which one is yours

Below the threshold — $201,750 of taxable income single, $403,500 married filing jointly for 2026 — none of §199A's machinery runs. Service business or not, payroll or not, you deduct the full share. Most filers who ask why their deduction is small are somewhere else entirely: their taxable income is low, so the ceiling is doing the work.

Inside the band — the next $75k single or $150k joint — the limits ramp in proportionally. For a specified service business the whole deduction is being withdrawn across that band, which is what makes the effective marginal rate inside it so much higher than the bracket suggests. For every other business, the W-2 wage limit ramps in instead.

Above the band — $276,750 single, $553,500 joint — a specified service business gets nothing at all, and any other business is held to the wage-and-property limit with no ramp. That is the point at which paying W-2 wages, rather than taking the whole profit as distributions, starts buying back a deduction.

Going deeper

  • What is the QBI deduction? — the explainer: who qualifies, what counts as qualified business income, and what §199A does to your return.
  • The QBI deduction phase-out — why one extra dollar inside the band can cost far more than your bracket, and the moves that keep you under the threshold.
  • S-corp savings calculator — a salary shrinks qualified business income and creates W-2 wages at the same time. That calculator runs both returns rather than one.
  • Self-employment tax calculator — the charge this deduction does not touch, because §199A reduces taxable income and Schedule SE is computed before it.
Questions

Frequently asked questions

What do I enter for taxable income?
Taxable income BEFORE this deduction: your AGI less the standard or itemized deduction, with the QBI deduction itself left out. That figure is what §199A measures against — not gross receipts, not AGI, and not the business's own profit. It matters because two separate rules key off it: the threshold where the wage limit and the specified-service phase-out begin, and the ceiling that caps every filer's deduction at 20% of taxable income. One caveat this calculator does not ask about: the statutory ceiling is measured on taxable income less net long-term capital gain and qualified dividends, so if a large part of your income is investment gain the figure here reads slightly high.
Why is my deduction less than the full share of my business income?
Three limits can bite, and the calculator says which one did. Below the threshold ($201,750 single, $403,500 married filing jointly for 2026) none of them apply and you get the full share. Above it, a specified service business phases out to nothing by $276,750 single or $553,500 joint, and any other business is capped by a share of the W-2 wages it pays plus an allowance for qualified property. Separately, and at any income, the deduction cannot exceed 20% of your taxable income.
Does an S-corp salary count as qualified business income?
No — and that is the trade-off the S-corp election turns on. Wages you pay yourself are compensation, not qualified business income, so electing S-corp status moves part of the profit out of the QBI base and shrinks this deduction. The same salary is W-2 wages for the wage limit, so above the threshold it can protect a deduction a sole proprietor with no payroll would lose. The S-corp calculator prices both returns together rather than one at a time.
What is UBIA, and do I need it?
UBIA is the unadjusted basis of qualified property the business holds — what it paid for depreciable assets, before §179 or bonus depreciation reduced the basis. It only matters above the threshold, where the wage limit applies: the limit is the greater of a share of W-2 wages alone, or a smaller share of wages plus a slice of UBIA. That second leg exists for property-heavy businesses with little payroll, so a rental or equipment-heavy operation should enter it. Leave it at zero if the business owns nothing depreciable.
Does the QBI deduction reduce self-employment tax?
No. It reduces taxable income, so it only ever reduces income tax. Self-employment tax is charged on net earnings from the business before any of this, which is why a freelancer can have a large QBI deduction and still owe the full Schedule SE amount. The two are worth calculating separately.

See your full tax picture

The QBI deduction depends on taxable income, which depends on everything else. The full optimizer computes it alongside your retirement contributions, entity choice, deductions and any rental property, on one set of numbers.

Open the full calculator

Last updated for tax year 2026 · Federal figures reviewed

Sources

Individual results vary. A planning estimate, not tax advice — confirm with a CPA before you file.

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