Finance
QBI Deduction Calculator
The QBI deduction can cut taxable income by up to 20% of net self-employment profit. Estimate eligibility and the deduction, including the phase-out for specified service businesses above the income threshold.
Quick answer: The QBI deduction lets pass-through owners deduct up to 20% of qualified business income, lowering taxable income (but not self-employment tax).
How it works
1. Identify qualified business income
QBI is the net income from a pass-through business — sole proprietorship, partnership, S corporation, or most LLCs. It excludes wages, capital gains, and investment income. This is the base the 20% deduction is calculated on before any limits apply.
2. Apply the 20% deduction
The deduction is generally 20% of your qualified business income, which directly lowers your taxable income (not your self-employment tax). A $100,000 QBI can yield up to a $20,000 deduction. It is taken whether you itemize or take the standard deduction.
3. Check the income thresholds
Above certain taxable-income thresholds (roughly $191,950 single and $383,900 married, indexed for inflation), the deduction phases in wage and property limits, and specified service businesses can lose it entirely. Below the threshold, the full 20% generally applies. The calculator estimates the deduction based on your income.
Frequently asked questions
What is the QBI deduction?
Section 199A lets owners of pass-through businesses deduct up to 20% of their qualified business income, lowering taxable income without affecting self-employment tax.
What is an SSTB?
A specified service trade or business — consulting, law, health, finance, and similar fields. Above the income threshold, SSTB owners begin to lose the deduction through a phase-out.
Is the deduction always 20%?
It's the lesser of 20% of QBI or 20% of taxable income, and above the threshold it's further limited by W-2 wages and property. This is an estimate — consult a CPA at higher incomes.