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QBI Deduction Calculator (Section 199A, 2026)
Pass-through owners can deduct up to 20% of qualified business income. Calculate yours, including SSTB phase-outs for service businesses.
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Quick Answer: The Section 199A QBI deduction lets eligible pass-through owners — sole props, LLCs, partnerships, S-Corps — deduct up to 20% of qualified business income. Below roughly $197,300 single / $394,600 MFJ (2026 est.) most owners get the full deduction; above that, Specified Service businesses (SSTBs) phase out and others face W-2 wage limits. BeginPulse’s free calculator applies the thresholds, SSTB phase-out, and wage limits to estimate your 2026 deduction.
QBI Deduction Calculator (Section 199A, 2026)
The Qualified Business Income (QBI) deduction lets pass-through owners deduct up to 20% of QBI from taxable income. It phases out above income thresholds and is restricted for "specified service trades or businesses" (SSTB).
Your numbers
- QBI$80,000
- Total taxable income (before QBI)$100,000
- Full-deduction threshold$197,300
- Full phase-out at$247,300
How it works
- • Below threshold ($197,300): 20% of QBI, no questions.
- • In phase-out band: QBI for SSTBs phases down linearly.
- • Above phase-out: SSTBs get $0; non-SSTBs may still qualify subject to W-2 / UBIA limits.
What is an SSTB?
A Specified Service Trade or Business under IRC §199A(d)(2) includes: health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, and any trade/business where the principal asset is the reputation or skill of one or more owners or employees. Engineering and architecture are notably excluded.
Frequently asked questions
What is the QBI deduction?
Section 199A lets eligible pass-through business owners — sole props, LLCs, partnerships, S-Corps — deduct up to 20% of their qualified business income from federal taxable income. It is a below-the-line deduction that does not reduce self-employment tax.
What is an SSTB and why does it matter?
A Specified Service Trade or Business (SSTB) is consulting, law, accounting, financial services, health, athletics, performing arts, or any business whose principal asset is the reputation or skill of its owners. SSTBs phase out the QBI deduction entirely above the income threshold (~$394,600 MFJ in 2026 est.).
What are the 2026 income thresholds?
The full deduction phases in below ~$197,300 single / ~$394,600 married filing jointly (2026 estimate based on IRS inflation indexing). Above that, SSTBs phase out and non-SSTBs become subject to W-2 wage and UBIA limits.
Do I need W-2 employees to take the QBI deduction?
No, not below the income thresholds. Above the threshold, non-SSTBs become subject to a W-2 wages limit (50% of W-2 wages, or 25% + 2.5% of unadjusted basis in qualified property). Owners with no W-2 wages above the threshold get a reduced or zero deduction.
Does QBI apply to S-Corp distributions?
Yes — S-Corp distributions (the portion above your reasonable salary) qualify as QBI. Your W-2 salary from the S-Corp does NOT count as QBI. This is why pure salary maximization can hurt your QBI deduction.