The 20% qualified business income deduction with 2026 thresholds, SSTB rules and wage limits
Updated October 2026
| Filing status | Threshold (simple 20% at or below) | Phase-in range ends | Range width |
|---|---|---|---|
| Married filing jointly | $403,500 | $553,500 | $150,000 |
| Married filing separately | $201,775 | $276,775 | $75,000 |
| Single, head of household and all others | $201,750 | $276,750 | $75,000 |
Source: Rev. Proc. 2025-32, section 4.26, for tax years beginning in 2026. The 2025 law known as the One Big Beautiful Bill Act (P.L. 119-21, section 70105) changed section 199A in three ways: the deduction no longer expires after 2025; the phase-in range widened from $50,000 to $75,000 ($100,000 to $150,000 joint); and from 2026 a taxpayer with at least $1,000 of QBI from businesses in which they materially participate gets a deduction of at least $400. The $400 and $1,000 amounts are indexed after 2026.
QBI is the net income, gain, deduction and loss from a qualified U.S. trade or business run as a sole proprietorship, partnership, S corporation, or certain trusts and estates. It does not include wages you earn as an employee, an S corporation owner’s reasonable salary, guaranteed payments a partnership pays you, capital gains and losses, most interest income, or income from a C corporation. QBI is figured after the deductions tied to the business, including the deductible half of self-employment tax, self-employed health insurance and retirement contributions. Qualified REIT dividends and publicly traded partnership income get a separate 20% that this calculator does not include.
The deduction is the smaller of the QBI component and 20% of (taxable income before the QBI deduction minus net capital gain). The Treasury regulations work through the steps, and the calculator reproduces them:
Between the threshold and the end of the range, the wage limit only partly applies. The reduction is the gap between 20% of QBI and the wage limit, multiplied by how far you are into the range. A married manufacturer with $300,000 of QBI, $480,000 of taxable income and $60,000 of W-2 wages is $76,500 into the $150,000 range (51%). 20% of QBI is $60,000 and the wage limit is $30,000, so the deduction is $60,000 − 51% × $30,000 = $44,700.
Businesses in health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage, investing and trading, or where the principal asset is the reputation or skill of the owners or employees, are SSTBs. Below the threshold they get the full 20% like anyone else. In the range, only an applicable percentage of their QBI, wages and property counts (100% minus how far into the range you are), and above the range they get nothing. The married consultant in the table below is 51% into the range, so only 49% of QBI (and of wages and property) counts. With no W-2 wages, the wage-limit phase-in then cuts that again by 51%, leaving a deduction of $12,005.
| Owner | 20% of QBI | After wage and SSTB limits | QBI deduction | Tax saved (approx.) |
|---|---|---|---|---|
| Sole proprietor, single: $80,000 QBI, $95,000 taxable income (default) | $16,000 | $16,000 | $16,000 | $3,520 |
| Same, but taxable income only $60,000 | $16,000 | $16,000 | $12,000 | $2,400 |
| Consultant (SSTB), married: $250,000 QBI, $480,000 taxable income | $50,000 | $12,005 | $12,005 | $3,842 |
| Same consultant, taxable income $560,000 (above the range) | $50,000 | $0 | $0 | $0 |
| Manufacturer, married: $300,000 QBI, $480,000 TI, $60,000 W-2 wages | $60,000 | $44,700 | $44,700 | $14,304 |
| Same manufacturer above the range ($600,000 TI) | $60,000 | $30,000 | $30,000 | $10,500 |
| Side business, single: $3,000 QBI, $40,000 TI | $600 | $600 | $600 | $72 |
The new $400 minimum only changes the result when 20% of QBI is under $400, which means between $1,000 and $2,000 of QBI from a business you materially participate in. For the $3,000 side business, 20% is already $600.
It models one business. Several businesses, aggregation elections, losses netted between businesses, qualified REIT dividends and PTP income, the cooperative (patron) deduction, and rental real estate safe-harbor questions are not modeled; neither is the reduction in a sole proprietor’s QBI for the self-employment tax deduction, which you should do before entering QBI. The tax saving uses ordinary 2026 brackets on taxable income and ignores capital-gain rates and state tax. If you are near a threshold, operate an SSTB, or own an S corporation, a CPA or enrolled agent can check Form 8995-A and the wage computation.