What is the Section 199A QBI deduction?

It is a deduction of up to 20% of qualified business income from a pass-through entity such as a sole proprietorship, partnership, or S corporation. It was created by the Tax Cuts and Jobs Act and reduces taxable income, not tax directly.

How does the wage and property limit work?

Above the income threshold, your deduction is capped at the greater of 50% of W-2 wages paid by the business, or 25% of W-2 wages plus 2.5% of the unadjusted basis (UBIA) of qualified property. Below the threshold the cap does not apply.

What are the 2025 income thresholds?

For tax year 2025 the lower threshold is $197,300 for single and most filers and $394,600 for married filing jointly. The phase-in range runs $50,000 above that for single filers and $100,000 for joint filers.

What is an SSTB and why does it matter?

A specified service trade or business such as law, health, accounting, or consulting loses the QBI deduction entirely once taxable income exceeds the top of the phase-in range. Below the threshold an SSTB is treated like any other business.

Is the deduction also limited by taxable income?

Yes. The final QBI deduction cannot exceed 20% of your taxable income minus net capital gains. This overall cap applies to everyone regardless of wages or property.

US QBI Deduction Calculator (Section 199A)

The Qualified Business Income (QBI) deduction under Internal Revenue Code Section 199A lets owners of pass-through businesses deduct up to 20% of their qualified business income. This calculator applies the deduction, the W-2 wage and property cap that phases in for higher earners, and the overall taxable-income limit.

How it works

The base deduction is 20% of QBI. If your taxable income is below the threshold, that is your tentative deduction. Once income rises into the phase-in range the wage/property cap is blended in, and above the top of the range the cap fully applies:

tentative   = 0.20 × QBI
wage_cap     = max( 0.50 × W2_wages , 0.25 × W2_wages + 0.025 × UBIA )
capped       = min(tentative, wage_cap)   (full cap above range)
overall_cap  = 0.20 × (taxable_income − net_capital_gain)
deduction    = min(capped, overall_cap)

In the phase-in range the reduction is applied proportionally, so the wage cap only removes part of the excess between the tentative deduction and the cap.

Tips and notes

If your taxable income is comfortably below the threshold, you get the full 20% with no wage or property test — leave those fields at zero. The wage/property cap matters most for capital-intensive or low-payroll businesses above the threshold. Specified service businesses (health, law, accounting, consulting and similar) lose the deduction entirely above the top of the phase-in range. This tool is an estimate; confirm UBIA figures and SSTB status with a tax professional, since property basis and aggregation rules can be intricate.