Section 199A QBI 2027 Deduction Calculator
Compute your Qualified Business Income (QBI) deduction for 2027 — 20% pass-through deduction made permanent under the OBBB (P.L. 119-21). Handles SSTB phaseout, wage/UBIA limits, and the simplified rule below the threshold. Free, private, no sign-up.
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What is the Section 199A QBI deduction?
Section 199A (also called the Qualified Business Income or QBI deduction) lets owners of pass-through businesses — sole proprietorships, partnerships, S corporations, and most LLCs — deduct up to 20% of qualified business income from federal taxable income. It was created by the 2017 TCJA to give pass-through owners a tax cut parallel to the C corporation rate reduction. The deduction was originally set to expire after tax year 2025.
The One Big Beautiful Bill (OBBB, P.L. 119-21, signed July 2025) made Section 199A permanent. Pass-through owners can continue to claim the 20% deduction for tax year 2027 and beyond without the prior sunset risk. The OBBB also locked in the income threshold structure with annual inflation indexing.
How the QBI deduction is calculated in 2027
The deduction equals the lesser of: (a) 20% of QBI, or (b) 20% of taxable income excluding net capital gain. Below the income threshold ($252,150 single / $504,300 MFJ for 2027), this is the full calculation — even Specified Service Trades or Businesses (SSTBs) like doctors, lawyers, and consultants qualify for the full 20%.
Above the threshold, two additional rules apply. First, SSTBs phase out entirely over the next $50,000 (single) or $100,000 (MFJ) of taxable income. Second, non-SSTB owners face a W-2 wage and UBIA (unadjusted basis immediately after acquisition) limit: the deduction is capped at the greater of (i) 50% of W-2 wages paid by the business, or (ii) 25% of W-2 wages plus 2.5% of UBIA of qualified property.
Example: $200,000 QBI for an SSTB owner
A consultant filing single with $200,000 of QBI and $250,000 of taxable income is just under the 2027 threshold of $252,150. The full 20% applies — deduction is $40,000, regardless of W-2 wages or UBIA. If taxable income rose to $302,150 (fully past the $50,000 SSTB phase-out range), the deduction would be zero because consulting is an SSTB.
The same income for a non-SSTB business (say a retail store) above the threshold would face the wage/UBIA limit. With $50,000 W-2 wages and $100,000 UBIA, the limit is the greater of $25,000 (50% × wages) or $15,000 (25% × wages + 2.5% × UBIA) = $25,000. So the deduction is the lesser of $40,000 (20% of QBI) or $25,000 (wage limit) = $25,000.
Source: irs.gov — Section 199A Final Regulations and OBBB §70110. Updated May 2026 reflecting OBBB (P.L. 119-21).