QBI 20% Deduction Calculator

The calculator starts with qualified business income and subtracts owner-level adjustments that commonly reduce QBI, including prior-year QBI losses, the deductible half of self-employment tax, self-employed health insurance, and self-employed retirement deductions.

It then computes the tentative 20% business QBI component. If taxable income is above the Section 199A threshold, the calculator applies the specified service trade or business rule, the W-2 wage and UBIA limitation, or the phase-in percentage that applies inside the threshold range.

Finally, it adds the separate 20% component for qualified REIT dividends and qualified PTP income, applies the overall taxable income cap, and models the 2026 active QBI minimum deduction when the entered facts meet the planning conditions.

What the QBI deduction is meant to measure

The qualified business income deduction is a below-the-line deduction for certain pass-through business income. The IRS describes the deduction as available to many owners of sole proprietorships, partnerships, S corporations, and some trusts and estates, but not for C corporation income or ordinary employee wage income. The core business component is generally 20% of QBI from a domestic qualified trade or business.

QBI is not simply gross receipts. It is the net amount of qualified business items of income, gain, deduction, and loss. For a sole proprietor, Schedule C profit is often the starting point, but the final QBI figure can be reduced by allocable deductions. For a partner or S corporation shareholder, the K-1 and Section 199A statement detail usually controls the business-level QBI, W-2 wages, UBIA, and SSTB information.

2026 QBI threshold amounts

IRS Revenue Procedure 2025-32 lists the 2026 Section 199A threshold amounts and the top of each phase-in range. Married filing jointly uses a $403,500 threshold and $553,500 top of range. Married filing separately uses $201,775 to $276,775. Single, head of household, and other returns use $201,750 to $276,750.

Why the taxable income number is so important

Section 199A tests taxable income before the QBI deduction. That means you normally need to know income, above-the-line deductions, the standard or itemized deduction, and other below-line deductions before using the QBI threshold. Use the taxable income calculator first if that number is still uncertain.

The final QBI deduction is also capped at 20% of taxable income minus net capital gain. This is why the calculator asks for qualified dividends and net capital gain. A taxpayer can have a strong business QBI component and still see the final deduction reduced by the taxable income cap.

SSTB income can phase out

A specified service trade or business is treated favorably below the threshold, partially counted inside the phase-in range, and generally excluded above the top of the range. This is a major distinction between a professional service business and a non-SSTB business with enough W-2 wages or qualified property.

The calculator applies an SSTB applicable percentage inside the range. For example, a single filer in 2026 with $239,250 of taxable income before QBI is halfway through the $75,000 phase-in range, so only 50% of the SSTB QBI, W-2 wages, and UBIA are counted in the simplified model.

W-2 wages and UBIA can protect the deduction

For higher-income non-SSTB owners, the W-2 wage and UBIA limitation becomes the main guardrail. The limit is the greater of 50% of W-2 wages or 25% of W-2 wages plus 2.5% of UBIA of qualified property. Businesses with payroll, depreciable real property, or other qualified property may preserve more QBI deduction than a high-income business with no wages and no qualified property.

What this calculator does not replace

This is a planning calculator, not a substitute for Form 8995, Form 8995-A, tax software, or a professional review. It models one business plus qualified REIT dividends and PTP income. Multiple businesses, aggregation elections, negative QBI, suspended losses, cooperative payments, trusts, estates, rental real estate safe harbor issues, and K-1 statement detail can change the final answer.

Use the result to understand the moving parts: taxable income, QBI after adjustments, SSTB status, wage/property support, REIT/PTP income, and the taxable income cap. Then reconcile the estimate to your records, pass-through statements, and the current IRS instructions before filing.

Keep the research moving with Schedule C Profit and Tax Reserve Calculator, Taxable Income Calculator, Self-Employment Tax Calculator, and Federal Income Tax Calculator.