QBI Deduction Calculator
Estimate your Section 199A deduction: up to 20% of qualified business income, with the 2026 thresholds, the service-business phase-out and the new $400 floor.
| 20% of QBI | $18,000 |
| Cap: 20% of taxable income | $16,000 |
| Deduction | $16,000 |
The taxable-income cap is what limits you here, not your business income.
Watch the phase-in happen
Slide taxable income across the 2026 threshold of $201,750. Under it, everyone gets 20%. Over the next $75,000, a service business loses the deduction step by step, and any business without W-2 wages or property is squeezed toward zero.
FULL 20%
QBI thresholds
| Filing status | 2026 threshold | Phase-in ends | 2025 threshold |
|---|---|---|---|
| Single / head of household | $201,750 | $276,750 | $197,300 |
| Married filing jointly | $403,500 | $553,500 | $394,600 |
| Married filing separately | $201,775 | $276,775 | $197,300 |
Sources: IRS Rev. Proc. 2025-32 and Rev. Proc. 2024-40; phase-in widths from the One Big Beautiful Bill Act (Pub. L. 119-21), which widened the range from $50,000/$100,000 to $75,000/$150,000 starting in 2026.
How the calculation runs
Below the threshold: deduction = the smaller of 20% × QBI or 20% × taxable income (before QBI, minus net capital gains). Above it, the 20% is limited to the greater of 50% of W-2 wages the business paid, or 25% of wages plus 2.5% of the original cost of qualified property. A typical freelancer has neither, so above the range the limit is zero. In the phase-in band, the reduction is applied proportionally.
Questions freelancers ask
What is the QBI deduction?
The qualified business income deduction under Section 199A lets owners of sole proprietorships, partnerships, S corporations and many LLCs deduct up to 20% of their qualified business income. It was made permanent by the One Big Beautiful Bill Act in 2025.
What are the 2026 QBI income limits?
Below $201,750 of taxable income (single, head of household) or $403,500 (married filing jointly) you get the full 20% with no wage or service-business limits. Limits phase in over the next $75,000 (single) or $150,000 (joint), fully applying above $276,750 or $553,500.
Is QBI 20% of net profit?
Not exactly. Qualified business income is net profit reduced by the deductible half of self-employment tax, the self-employed health insurance deduction and retirement contributions tied to the business. The deduction is also capped at 20% of taxable income before QBI, which often binds for lower earners.
What is a specified service trade or business (SSTB)?
Fields where the main asset is the owner's skill or reputation: health, law, accounting, actuarial science, performing arts, consulting, athletics, financial and brokerage services. Above the phase-in range, SSTB income gets no QBI deduction at all.
What is the new $400 minimum QBI deduction?
Starting in 2026, taxpayers with at least $1,000 of qualified business income from active trades or businesses get a QBI deduction of at least $400, even if the regular calculation would produce less (still subject to the taxable-income cap).
Does the QBI deduction reduce self-employment tax?
No. It only reduces taxable income for income tax. Self-employment tax is still figured on your full net earnings.