QBI Deduction (Section 199A): How to Save 20% on Business Income

What Is the QBI Deduction?

The Qualified Business Income (QBI) deduction allows eligible self-employed taxpayers and small business owners to deduct up to 20% of their qualified business income. This is one of the most valuable deductions available.

Who Qualifies?

Pass-through businesses (sole proprietorships, partnerships, S-Corps, and LLCs) may qualify. The deduction phases out for specified service businesses (law, healthcare, consulting) above certain income thresholds ($191,950 single, $383,900 married).

How It Works

If your taxable income is below the threshold, you simply deduct 20% of your QBI. Above the threshold, the calculation becomes more complex, factoring in W-2 wages paid and property held by the business.

Impact on Your Tax Bill

For a business earning $100,000 in profit, the QBI deduction could save $4,400-$7,400 in taxes depending on your tax bracket. See the exact impact for your state and industry on our calculator.