QBI deduction calculator
See how the Section 199A deduction applies to your pass-through income, thresholds and SSTB status. It’s an estimate from your numbers, not advice; Krystal checks the real picture on a call.
The One Big Beautiful Bill Act (July 2025) made the QBI deduction permanent; it no longer ends after 2025.
Net profit from your pass-through business (Schedule C, K-1 and so on).
All your taxable income, including this QBI. Example: $200,000 of AGI less a $24,000 standard deduction is $176,000.
Wages, property and capital gains
W-2 wages and property basis matter most when taxable income is over $197,300.
Wages paid to employees, including your own salary in an S-Corp.
Original cost of depreciable property still in its recovery period.
Net capital gains lower the 20%-of-taxable-income cap. Leave at $0 if unknown; that may overstate the deduction for investors with large gains.
Estimated QBI deduction · 2025
Illustrative$20,000
Full deduction. The deduction lowers taxable income, not tax directly.
| Line item | Amount |
|---|---|
| Approximate tax reduction | ~$4,800 |
| Deduction as a share of QBI | 20.0% |
| Marginal tax bracket | 24% |
Where your income sits
The shaded band is the phase-out range; the marker is your taxable income.
$150K
Taxable income: $150K
| Mark | Value |
|---|---|
| Taxable income | $150K |
| Phase-out starts | $197K |
| Phase-out ends | $247K |
Taxable income $150K; phase-out range $197K to $247K.
The shaded band is the phase-out range; the dark line is your taxable income of $150K.
Below the phase-out range
$47,300 below the lower threshold.
Step-by-step calculation
- Tentative QBI Deduction$20,000100,000 × 20% = 20,000IRS Rev. Proc. 2024-40, Section 3.30
- Determine Phase-Out Thresholds$50,000single: Low = $197,300, High = $247,300IRS Rev. Proc. 2024-40, Section 3.30
- Full Deduction (Below Threshold)$20,000Taxable income $150,000 ≤ threshold $197,300 → full 20% deductionIRS Rev. Proc. 2024-40, Section 3.30
- QBI deduction$20,000
Notes
- QBI deduction is scheduled to expire after 2025 unless Congress extends it
Data source: IRS Revenue Procedure 2024-40
What to look at
Full 20% Deduction Protected
Your income is $47,300 below the phase-out threshold. You qualify for the full 20% QBI deduction.
QBI Deduction Now Permanent
The One Big Beautiful Bill Act (July 2025) made the QBI deduction permanent — it no longer expires after 2025. Build it into your long-term planning.
Document Your Business Activities
Keep detailed records of your business activities to support your non-SSTB classification in case of an IRS audit.
Estimates for tax years 2024 and 2025 under Section 199A. The actual deduction depends on your other income, deductions and business details. Results vary. This is not tax advice.
Method
How the estimate works.
What the calculator does
It takes up to 20% of your qualified business income, then applies the taxable-income cap, the SSTB phase-out and, above the threshold, the W-2 wage and property limit. The tax reduction uses your marginal bracket.
Pass-through businesses qualify: sole proprietorships, partnerships and LLCs, S-Corps, trusts and estates.
Thresholds for 2025
- Single: $197,300 to $247,300
- Married filing jointly: $394,600 to $494,600
Below the lower threshold you get the full 20% whatever the business. An SSTB above the upper threshold gets no deduction; in between, the deduction phases out in proportion.
What counts as an SSTB
Specified service trades or businesses are fields where the main asset is the skill or reputation of the people: health, law, accounting, consulting, financial services and brokerage, and performing arts and athletics.
Engineering and architecture are excluded from the SSTB definition.
Now permanent
The deduction was scheduled to end after December 31, 2025. The One Big Beautiful Bill Act (signed July 2025) made it permanent.
What it leaves out
- More than one business, aggregation and losses carried forward.
- Qualified REIT dividends and publicly traded partnership income.
- State income tax.
Krystal covers those on a call.
FAQ
QBI deduction questions.
What is the QBI deduction?
The Qualified Business Income (QBI) deduction, also known as the Section 199A deduction, allows eligible self-employed and small business owners to deduct up to 20% of their qualified business income from their taxable income.
What is an SSTB?
A Specified Service Trade or Business (SSTB) is a business that provides services in fields like health, law, accounting, consulting, financial services, or any trade where the principal asset is the reputation or skill of employees. SSTBs face phase-out restrictions on the QBI deduction at higher income levels.
What are the 2025 QBI income thresholds?
For 2025, the QBI deduction phase-out begins at $197,300 for single filers and $394,600 for married filing jointly. The deduction fully phases out at $247,300 (single) and $494,600 (married filing jointly) for SSTBs.
Does the QBI deduction expire?
No. The QBI deduction under Section 199A was scheduled to expire after December 31, 2025, but the One Big Beautiful Bill Act (signed July 2025) made it permanent.
Keep reading
Related.
Start with fifteen minutes.
Krystal calls you to see whether LeCPA fits what you’re building.