QBI Deduction Calculator

The three limits this estimate layers

Section 199A can allow a deduction of up to 20% of qualified business income, but “20% of profit” is only the starting point. This calculator models one trade or business and then shows the three major constraints separately: the specified-service phase-out, the W-2 wage and qualified-property limit, and the overall taxable-income cap.

For 2026, the threshold is $403,500 for married filing jointly, $201,775 for married filing separately, and $201,750 for other returns. The top of each phase-in range is $553,500, $276,775, and $276,750, respectively. Those figures are published in IRS Revenue Procedure 2025-32, section 4.26 and Internal Revenue Bulletin 2025-45.

At or below the threshold, the wage/property limitation does not reduce the QBI component. Inside the range, the limitation phases in. Above the range, a non-SSTB is fully limited to the lesser of 20% of QBI or the wage/property amount. That amount is the greater of 50% of business W-2 wages or 25% of those wages plus 2.5% of UBIA, as specified in IRC §199A(b)(2).

Rates current as of September 2026.

How SSTB treatment changes the calculation

For an SSTB inside the phase-in range, only an applicable percentage of QBI, wages, and UBIA is considered. The percentage starts at 100% at the threshold and reaches zero at the top. The calculator shows the QBI removed as the “SSTB haircut,” then applies the phased wage/property limit to the remaining amounts. An SSTB above the top receives zero from that business under this model. The Form 8995-A instructions describe the applicable-percentage approach.

The overall cap is 20% of taxable income before the QBI deduction minus net capital gain. Taxable income is a return-level figure, so entering business profit in that box can materially overstate or understate the result.

Worked 2026 example

Assume one non-SSTB has $100,000 of 2026 QBI, the owner has $180,000 of taxable income before the deduction, and there is no net capital gain, business W-2 wage amount, or qualified-property UBIA. The tentative deduction is $100,000 × 20% = $20,000. The $180,000 taxable income is below the 2026 $201,750 threshold for all other returns, so the wage/property limitation has not begun to phase in. The overall cap is $180,000 × 20% = $36,000. The allowed result is the lower of $20,000 and $36,000, so it is $20,000. The 2026 $400 statutory minimum does not increase an already larger deduction.

The new $400 minimum

The One Big Beautiful Bill Act added IRC §199A(i). For 2026, an applicable taxpayer with at least $1,000 of aggregate QBI from active qualified trades or businesses receives the greater of the otherwise calculated deduction or $400. “Active” incorporates material-participation rules, and aggregate QBI can differ from the one positive business entered here. The floor display therefore identifies whether this simplified input applies it; it does not establish material participation.

This calculator assumes nonnegative QBI and one business. It does not handle qualified-business losses, prior-year carryovers, aggregation elections, cooperatives, REIT dividends, publicly traded partnerships, fiscal-year pass-throughs, or interactions among multiple SSTBs and non-SSTBs. W-2 wages must be wages allocable to this business, not wages the owner received from an unrelated employer. UBIA requires asset-level eligibility and period testing.

Common mistakes and edge cases

• Entering Schedule C gross receipts instead of net qualified business income overstates the starting amount.
• Using business profit as return-level taxable income can miss wages, deductions, a spouse's income, and other items.
• Entering the owner's unrelated W-2 wages in the business wage box can create a deduction the business did not earn.
• Assuming every consultant is an SSTB, or that every service business is not one, skips the statutory field and reputation tests.
• Ignoring loss carryovers, aggregation, REIT/PTP income, capital gains, or multiple businesses can make a single-business result unusable.

What to do next

Reconcile QBI to the business return and identify prior-year qualified-business losses. Determine SSTB status and business-allocable W-2 wages and UBIA from records, not guesses. Then calculate taxable income and net capital gain at the return level. If any amount is near a 2026 threshold, model the full Form 8995-A schedules and preserve the source documents supporting wages, property basis, and aggregation choices.

Disclaimer: This calculator is informational only and is not tax or legal advice. Use the current Form 8995 or Form 8995-A instructions and your complete return facts before claiming a deduction.