The 20% QBI deduction can be a game-changer for small business owners. Learn how to qualify and maximize this valuable tax break.

The Qualified Business Income (QBI) Deduction

What Is QBI?

The Qualified Business Income deduction (Section 199A) allows eligible self-employed and small business owners to deduct up to 20% of their qualified business income.

Who Qualifies?

Sole proprietors
Partnerships
S-corporations
Certain trusts and estates
Does NOT apply to C-corporations

Basic Calculation

QBI Deduction = Lesser of:

20% of Qualified Business Income, OR
20% of taxable income (minus net capital gains)

Income Limits (2025)

Below $197,300 (single) / $394,600 (MFJ): Full deduction available
Above thresholds: Deduction may be limited for Specified Service Trades or Businesses (SSTBs)

Specified Service Trades or Businesses

Professionals like doctors, lawyers, financial advisors, and consultants face additional limitations above the income thresholds.

W-2 Wage and Property Limitation

Above income thresholds, the deduction is limited to the greater of:

50% of W-2 wages paid, OR
25% of W-2 wages + 2.5% of qualified property

Could the QBI deduction apply to your business? Contact us for a personalized analysis.

The Qualified Business Income (QBI) Deduction