QBI Wages and Property Limit 2027 Calculator
Estimate the W-2 wages and Unadjusted Basis Immediately After Acquisition (UBIA) limit on your QBI deduction for non-SSTB businesses.
When Does the W-2/UBIA Limit Apply?
For 2027, the W-2 wages and UBIA property limit applies to NON-SSTB pass-through owners whose taxable income exceeds approximately $241,950 single / $483,900 MFJ. Below those thresholds, you get the full 20% deduction with no wage or property test. SSTB owners hit a different (phaseout) test, not this one. Source: IRC §199A(b)(2). Last updated: May 2026.
The Two-Part Test
Your QBI deduction is capped at the GREATER of: (a) 50% of W-2 wages paid by the qualified trade or business, OR (b) 25% of W-2 wages PLUS 2.5% of UBIA of qualified property. The second test favors capital-intensive businesses (real estate, manufacturing) with low payroll relative to assets.
What Counts as UBIA?
Unadjusted Basis Immediately After Acquisition (UBIA) = the original cost basis of tangible depreciable property still in its recovery period. Land does NOT count (not depreciable). Property held for the longer of 10 years or its MACRS recovery period qualifies. Real estate owners benefit most because of high UBIA.
Strategy: Maximize the Limit
(1) Increase W-2 wages — convert independent contractors to employees if defensible. (2) For real estate: cost segregation studies allocate more basis to qualifying personal property (5/7/15-year). (3) Buy new equipment in high-income years to boost UBIA. (4) Aggregate businesses under §199A to pool wages/property where rules allow.
Frequently Asked Questions
When does the W-2/UBIA limit apply for 2027?
For non-SSTB pass-through owners with taxable income above $241,950 single / $483,900 MFJ in 2027. Below these thresholds, no W-2 or property test \u2014 just full 20% deduction. SSTBs hit a different phaseout.
What is the formula for the W-2/UBIA limit?
Your QBI deduction is capped at the GREATER of: (a) 50% of W-2 wages paid by the qualified business, or (b) 25% of W-2 wages plus 2.5% of UBIA of qualified property. Choose whichever gives you the higher cap.
What counts as 'qualified property' for UBIA?
Tangible, depreciable property held for use in the qualified business at year-end and still within its depreciable life (longer of 10 years or its MACRS recovery period). Land doesn't count because it's not depreciable. Real estate buildings, equipment, vehicles, fixtures qualify.
Can I count my S corp owner W-2 wages?
Yes \u2014 wages paid to an S corp owner (reasonable compensation) count toward the \u00a7199A W-2 wage limit, even though those wages are NOT QBI themselves. So paying yourself a reasonable salary helps both for FICA compliance AND for boosting the QBI cap.
Do I have to be the property owner to count it?
Yes. UBIA only counts property owned by the qualified trade or business at year-end. Property leased from a related party doesn't count for the lessee \u2014 but the lessor can use it (if the lessor's rental rises to a trade or business).
What's a real-world example of the 25%+2.5% test?
A real estate rental with $50K W-2 wages and $5M UBIA: 50% \u00d7 $50K = $25K, but 25% \u00d7 $50K + 2.5% \u00d7 $5M = $12,500 + $125,000 = $137,500. The second test wins by 5x. This is why real estate investors care so much about UBIA.