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QBI Deduction 2026

Made permanent, widened, and given a floor — 2026 changed the 20% pass-through deduction three ways.

The §199A deduction lets pass-through owners deduct 20% of qualified business income — and 2026 changed it more than any year since 2018: OBBBA made it permanent, widened the phase-in ranges from $50k/$100k to $75k/$150k, and added a $400 minimum deduction for active owners. But the traps remain: SSTB income phases to zero, the wage/UBIA limit can gut the deduction for a solo owner with no employees, and most sites still show pre-OBBBA ranges or confuse the threshold with the 24% bracket boundary. This calculator runs all three regimes with the correct 2026 numbers.

Why people use this

Pass-through owners use it to find their real 20% deduction across the three 2026 regimes — and to catch the two traps that gut it: no W-2 wages above the threshold can zero the regular formula (the new $400 minimum is the floor), and SSTB income still cliffs to zero at the top of the widened phase-in range.

How it works

1. Pick filing status — note MFS has its own threshold ($201,775), not half of joint.
2. Enter QBI and taxable income BEFORE the QBI deduction — which regime you are in depends on it.
3. Say whether the business is a specified service trade (health, law, accounting, consulting, financial services, athletics, performing arts).
4. Enter W-2 wages paid and UBIA of qualified property — they only matter above the threshold, where they decide whether you keep the deduction.

Common questions

What are the 2026 QBI deduction income limits?

Full 20% deduction below taxable income of $201,750 (single/head of household), $201,775 (MFS — its own figure, not half of joint), or $403,500 (joint), per Rev. Proc. 2025-32. Above that, limitations phase in across the new wider ranges: $75,000 single-type, $150,000 joint (OBBBA §70105 — up from $50k/$100k). SSTB owners lose the deduction entirely past $276,750 / $553,500.

I have no employees — can I still get the deduction above the threshold?

Only via property or the new floor. Above the phase-in, the deduction is the lesser of 20% of QBI or the greater of 50% of W-2 wages or 25% of wages + 2.5% of UBIA — so a solo owner with no wages and no qualified property gets $0 from the regular formula. New for 2026: §199A(i) guarantees $400 if you have $1,000+ of QBI from a business you materially participate in. The real lever is taxable income: SEP-IRA/HSA contributions that pull you back under the threshold restore the full 20%.

What counts as QBI — and what quietly reduces it?

For a sole proprietor, QBI is NOT the Schedule C line-31 number: subtract the deductible half of self-employment tax, self-employed health insurance premiums, and SEP/SIMPLE/401(k) contributions first — QBI typically lands at 85–93% of Schedule C profit. For S-corp owners, reasonable compensation is W-2 wages, never QBI. The deduction itself reduces income tax only — not SE tax, NIIT, or Additional Medicare — and is capped at 20% of taxable income minus net capital gains.

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