QBI W-2 Wage Limit 2026 Calculator (Section 199A)
Compute the 2026 QBI deduction under IRC §199A — the lesser of 20% of QBI or the W-2 wage limit (50% of W-2 OR 25% of W-2 + 2.5% of UBIA). Handles SSTB phase-out at $241,950 single / $483,900 joint.
| Standard 20% of QBI | — |
| 50% of W-2 wages | — |
| 25% W-2 + 2.5% UBIA | — |
| Best W-2/UBIA limit | — |
| Taxable income limit (20% of TI - net cap gain) | — |
| SSTB phase-out factor | — |
| Final QBI deduction | — |
IRC §199A grants pass-through owners a deduction of up to 20% of Qualified Business Income (QBI). Above the 2026 threshold of $241,950 single / $483,900 joint, the deduction is limited to the greater of 50% of W-2 wages paid by the business OR 25% of W-2 wages plus 2.5% of the Unadjusted Basis Immediately after Acquisition (UBIA) of qualified property.
The 2026 Income Thresholds
For tax year 2026, the threshold (below which no W-2/UBIA limit applies, no SSTB exclusion) is $241,950 single / $291,950 phase-out ceiling and $483,900 joint / $583,900 phase-out ceiling per Rev. Proc. 2025-32 inflation adjustments. The phase-out range is $50,000 single / $100,000 joint. Above the ceiling, SSTBs lose the deduction entirely and non-SSTBs face the full W-2/UBIA test.
The 50% vs 25%+2.5% Choice
Real estate, manufacturing, and asset-heavy businesses use the 25% W-2 + 2.5% UBIA test because they have low payroll but high property basis. Service firms with high wages use the 50% W-2 test. The calculator takes the higher of the two. UBIA stays in qualified property pool for 10 years or the regular depreciation period, whichever is longer (Treas. Reg. §1.199A-2).
SSTB — Who Loses Out
Specified Service Trades or Businesses (SSTBs) include health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage, and any trade where the principal asset is the reputation or skill of one or more employees. Architecture and engineering are explicitly excluded from SSTB status. Above the phase-out ceiling, SSTB owners get $0 QBI deduction.
Aggregation and Loss Rules
Owners can aggregate businesses under Treas. Reg. §1.199A-4 if they share majority ownership, common control, and meet two of three operational tests. Qualified losses carry forward and reduce next year's QBI. Last updated May 2026 per Rev. Proc. 2025-32 inflation adjustments. The One Big Beautiful Bill Act made §199A permanent — no 2026 sunset.