The QBI Deduction: 20% Off Your Business Income

Updated June 2026

Here is a tax break that sounds too good to be true. You might get to deduct 20% of your business income before the IRS touches it. That is the QBI deduction. And yes, it is real.

QBI stands for Qualified Business Income. It applies to sole proprietors, LLCs, partnerships, and S-corp owners. Basically anyone running a business that is not a C-corp. If you get a K-1 or a Schedule C, pay attention.

How the 20% Works

Take your qualified business income. Multiply by 0.2. Subtract that from your taxable income. Done. If you are a single filer making under $191,950 (2024) or married under $383,900, you get the full 20% with no questions asked.

Above those numbers, things get more interesting. The deduction starts phasing out if your business is in a "specified service trade or profession." That means doctors, lawyers, accountants, consultants, and similar. If you sell widgets, you are probably fine.

The Phaseout Zone

Between the threshold and $100,000 above it (for joint filers), the QBI deduction gets gradually limited. The limitation depends on two things: your business's W-2 wages and the cost of your depreciable property.

If you have employees and equipment, you can still claim a partial deduction even as a high earner. If you are a solo consultant with zero W-2 wages and zero property, the phaseout hits harder. The formula is complicated. That is why we built a calculator.

Use the Calculator. Seriously.

The QBI deduction involves more moving parts than most tax breaks. Income thresholds, service business limitations, W-2 wage tests, property basis calculations. Doing it by hand is a recipe for mistakes.

Our QBI deduction calculator handles all of it. Enter your business income, filing status, wages, and property. It tells you exactly what you can deduct. No guesswork.