QBI Section 199A Deduction Calculator 2026
Calculate your 20% qualified business income deduction under IRC §199A for 2026, including SSTB phaseout at $241,950 / $483,900 and W-2 wage limitation. OBBB made this deduction permanent.
How the Section 199A QBI Deduction Works in 2026
The Section 199A qualified business income (QBI) deduction allows pass-through business owners — sole proprietors, S-corp shareholders, partners, and LLC members — to deduct up to 20% of their qualified business income from federal taxable income. The deduction does not affect adjusted gross income; it is a "below-the-line" deduction taken on Schedule 1 of Form 1040, regardless of whether you itemize or take the standard deduction.
The One Big Beautiful Bill (OBBB, P.L. 119-21, signed July 4, 2025) made Section 199A permanent. Without OBBB, the deduction would have expired after December 31, 2025 under the original TCJA sunset. As of 2026, it is a permanent feature of the tax code. Source: irs.gov/newsroom/qualified-business-income-deduction. Last updated: May 2026.
SSTB Phaseout Thresholds for 2026
For Specified Service Trades or Businesses (SSTBs) — which include law, accounting, health services, financial services, consulting, and brokerage — the QBI deduction phases out between $241,950 and $291,950 for single filers, and between $483,900 and $583,900 for married filing jointly filers in 2026. Below the lower threshold, SSTBs get the full deduction. Above the upper threshold, SSTBs receive zero deduction. Engineers and architects are explicitly excluded from SSTB treatment under IRC §199A(d)(1)(B).
Non-SSTB businesses above the threshold face a W-2 wage limitation: the deduction is capped at the greater of (a) 50% of W-2 wages paid, or (b) 25% of W-2 wages plus 2.5% of the unadjusted basis of qualified property. Sole proprietors with no employees have a $0 W-2 base, which can reduce the deduction significantly above threshold. Source: IRS Publication 535, Chapter 12.
QBI Deduction vs. Self-Employment Tax Deduction
| Deduction | Type | Who Gets It | Amount | Form |
|---|---|---|---|---|
| QBI (§199A) | Below-the-line | Pass-through owners | Up to 20% of QBI | Form 8995 / 8995-A |
| SE Tax Deduction | Above-the-line | Self-employed only | 50% of SE tax paid | Schedule 1 Line 15 |
| Home Office | Above-the-line (SE) | Self-employed with home office | Actual or simplified | Form 8829 |
The QBI deduction is calculated on net profit AFTER deducting the self-employment tax deduction and self-employed health insurance. Make sure to reduce business net income by these amounts before entering QBI. Use IRS Form 8995 if your taxable income is below the threshold, or Form 8995-A if above. Source: irs.gov/form8995.