QBI Deduction Calculator (Section 199A)
By Forrest Baumhover, CFP®, EA · Last verified July 29, 2026
Calculate your Section 199A qualified business income (QBI) deduction — including SSTB, W-2 wage, and UBIA limits — free, with full IRC and Rev. Proc. citations.
Computes tax year 2026 only. Thresholds and phase-in ranges change every year, so do not use it for a 2025 or earlier return.
How to calculate the QBI deduction, step by step
The qualified business income deduction is worked out business by business, then capped by your overall taxable income. These are the steps the calculator above follows, each tied to the subsection of IRC §199A that governs it.
- Find the qualified business income (QBI) of each trade or business. QBI is the net amount of qualified income, gain, deduction and loss from the business, not counting capital gains or losses, or most investment income (IRC §199A(c)). A loss from one business is netted against the QBI of your others.
- Take 20% of each business's QBI (IRC §199A(b)(2)(A)).
- Compare your taxable income to the threshold amount for your filing status (table below). Taxable income here is figured before the QBI deduction itself (IRC §199A(e)(1)). At or below the threshold, the 20% figure from step 2 stands, and the business's type does not matter.
- Above the threshold, apply the W-2 wage and UBIA limit. Each business's deduction cannot exceed the greater of (i) 50% of its W-2 wages, or (ii) 25% of its W-2 wages plus 2.5% of the unadjusted basis immediately after acquisition (UBIA) of its qualified property (IRC §199A(b)(2)(B)). Owners of S corporations should note that W-2 wages depend on what the owner pays themselves; see the reasonable compensation calculator.
- Inside the phase-in range, the limit applies gradually. Once taxable income passes the threshold, the limit in step 4 phases in over $75,000 of taxable income ($150,000 on a joint return): the 20% figure is reduced by the same proportion of any shortfall against the wage/UBIA amount (IRC §199A(b)(3)(B)). Past the end of the range, the limit applies in full.
- Specified service trades or businesses (SSTBs) phase out entirely. A health, law, accounting, consulting, financial-services or similar business, or one that trades on the reputation or skill of its owners, is an SSTB (IRC §199A(d)(2)). Across the same phase-in range, only an "applicable percentage" of its QBI, wages and UBIA counts, falling from 100% to 0% (IRC §199A(d)(3)). Past the range, an SSTB gets no deduction.
- Add 20% of qualified REIT dividends and qualified publicly traded partnership (PTP) income (IRC §199A(b)(1)(B)). This component is not subject to the W-2 wage/UBIA limit or SSTB status.
- Cap the total at 20% of taxable income minus net capital gain (IRC §199A(a)(2)). The deduction is the lesser of that cap and the combined amount from steps 1 through 7. A small statutory minimum deduction can apply to taxpayers with active QBI (IRC §199A(i)); the calculator applies it automatically.
2026 threshold amounts by filing status
| Filing status | Threshold amount | End of phase-in range |
|---|---|---|
| Single, head of household, qualifying surviving spouse | $201,750 | $276,750 |
| Married filing jointly | $403,500 | $553,500 |
| Married filing separately | $201,775 | $276,775 |
Source: Rev. Proc. 2025-32 §4.26 (2026 inflation-adjusted §199A(e)(2) threshold and §199A(b)(3)(B)/(d)(3)(A) phase-in range amounts), fetched from irs.gov/pub/irs-drop/rp-25-32.pdf on 2026-07-11. These amounts are adjusted for inflation each year; this calculator computes tax year 2026 only. For a 2025 or earlier return, the thresholds and phase-in ranges differ, so do not use these figures.
Two worked examples
Below the threshold. A single filer has $60,000 of QBI from a sole proprietorship and $100,000 of taxable income before the deduction, well under the threshold. The deduction is 20% of QBI, $12,000, which is under the cap of 20% of taxable income ($20,000). The calculator returns $12,000, reported on Form 8995.
SSTB halfway through the phase-in. A single filer owns a specified service business with $100,000 of QBI and $30,000 of W-2 wages, and has taxable income of $239,250, exactly halfway through the phase-in range. Only 50% of the QBI and wages count, and the wage limit is phased in by half. The calculator returns $8,750, on Form 8995-A.
The examples above are computed by this calculator, not typed in. The calculator does not model the §199A aggregation election; each business you enter is computed on its own.
More from the Desk
More practitioner writing from Forrest Baumhover, CFP®, EA at The Federal Tax Desk on Substack.
Download the QBI Calculator Compliance Card (PDF) — to record your firm’s review of this tool
Common Questions
What is Section 199A?
IRC §199A is the federal tax provision that created the qualified business income (QBI) deduction — the 'pass-through deduction' that lets owners of sole proprietorships, partnerships, S corporations, and some trusts and estates deduct a portion of their business income.
How is the QBI deduction calculated?
Your taxable income generally caps the deduction at 20% of your qualified business income. Once your taxable income crosses this calculator's built-in threshold for your filing status, W-2 wages paid and the unadjusted basis of qualified property (UBIA) start limiting the deduction for most businesses. Specified service businesses (SSTBs) lose the deduction entirely once income clears the top of that range. Enter your numbers above and this calculator applies the current tax year's IRC §199A rules automatically.
What are the QBI deduction income thresholds for 2026?
For tax year 2026, the threshold amount is $201,750 for single, head of household, and qualifying surviving spouse filers, $403,500 for married filing jointly, and $201,775 for married filing separately (Rev. Proc. 2025-32 §4.26). The phase-in range runs $75,000 above the threshold, or $150,000 on a joint return, under IRC §199A(b)(3)(B) and (d)(3).
Does this calculator work for a 2025 or earlier return?
No. It computes tax year 2026 only. The §199A threshold and phase-in amounts are adjusted every year, and the minimum deduction in §199A(i) applies only to taxable years beginning after 2025, so results for an earlier year would be wrong.
Do REIT dividends and publicly traded partnership income qualify?
Yes. Qualified REIT dividends and qualified publicly traded partnership (PTP) income earn a separate 20% deduction under IRC §199A(b)(1)(B) that is not limited by W-2 wages, UBIA, or SSTB status. Enter them in the REIT/PTP field for the business they relate to.
Is this QBI calculator free?
Yes. It's free to use, with no signup required — enter your numbers and get the deduction amount with its supporting citations immediately.
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