QBI Deduction Calculator
Compute the IRC §199A Qualified Business Income (QBI) deduction — 20% of qualified pass-through business income from Schedule C / S-Corp / partnership / sole proprietorship. The wage-and-property limitation phases in at $232,500 single / $464,200 married-filing-jointly (2025 thresholds), and the Specified Service Trade or Business (SSTB) full phase-out lands at $382,500 single / $614,200 MFJ. Cited to IRC §199A, Treas. Reg. §1.199A-1 through §1.199A-6.
before wage / SSTB limits
taxable income − capital gains
greater of 50% of W-2 wages or 25% of W-2 wages + 2.5% of UBIA — binds only above the threshold
Taxable income is at or below the §199A threshold — the deduction is the full 20% of QBI, capped only by the overall 20%-of-(taxable income − net capital gains) limit. No wage limit; SSTBs still qualify.
Your taxable income $150,000 vs the single threshold $197,300 and phase-in band $197,300–$247,300.
Estimate only — not tax advice. This is a simplified §199A model (no aggregation, REIT, or PTP income; SSTB phase-in approximated). Consult a CPA, Enrolled Agent, or tax attorney before relying on any figure, and confirm the current-year thresholds.
View the TypeScript implementation on GitHub: packages/calc/src/qbi-deduction.ts · view tests
What this means
The §199A deduction looks simple from a distance — “20% off your business income” — and stays that way right up until your taxable income crosses the threshold. Below it, the deduction really is just 20% of QBI, capped only by the overall 20%-of-taxable-income limit. Above it, two separate machines start grinding: a wage-and-property cap for everyone, and a full phase-out that singles out Specified Service Trades or Businesses.
In my experience, the input that surprises operators most is the wage-and-property limit. A solo Schedule C consultant with no employees and no equipment has a wage limit of zero, so the moment their income clears the threshold the deduction doesn’t shrink — it falls off a cliff. I’ve found that seeing the “tentative 20%” figure sit next to a much smaller “wage & property limit” is what makes the S-Corp conversation finally click: W-2 wages are the lever that keeps the deduction alive up there.
This tool is an estimate, not a recommendation. It will not tell you to elect S-Corp, change your salary, or aggregate businesses — those are facts-and-circumstances calls that belong to a CPA or Enrolled Agent who can see your whole return and your state. What it does is make the §199A arithmetic legible so you walk into that conversation already understanding which regime you’re in and why.
Worked example
Start with the default: $100,000 of QBI, $150,000 of taxable income before the deduction, filing single, not an SSTB, no W-2 wages. The income-limit base is the full $150,000, so the tentative deduction is 20% × min($100,000, $150,000) = $20,000. Taxable income $150,000 is below the 2025 single threshold of $197,300, so no wage limit applies — the deduction is the full $20,000, a clean 20%of QBI. This is the “below threshold” regime.
Now push taxable income to $222,300— $25,000 into the $50,000 phase-in band, so the limitation is exactly halfway phased in (pct = 0.5). Keep the $100,000 QBI but add $20,000of W-2 wages. The tentative is still $20,000; the wage limit is 50% × $20,000 = $10,000. In the phase-in regime the reduction is (tentative − wage-limited) × pct = ($20,000 − $10,000) × 0.5 = $5,000, so the deduction lands at $15,000. I’ve seen this midpoint case do the most teaching: the same business with zeroW-2 wages at that income would phase down toward zero instead, which is the whole argument for creating payroll — a call to make with a CPA, not from a calculator.
Frequently asked questions
The information and tools on this website are for general educational purposes only and do not constitute financial, investment, legal, or tax advice. Consult a licensed professional for decisions specific to your situation.