QBI deduction (IRC 199A)
The basic Qualified Business Income deduction is the lesser of:
- 20% of QBI
- 20% of taxable income
QBI 199A (v1)
deduction = min(0.20 × QBI, 0.20 × taxable income)
Hero example
| Item | Amount |
|---|---|
| QBI | $100,000 |
| Taxable income (TI) | $80,000 |
| 20% × QBI | $20,000 |
| 20% × TI | $16,000 |
| Deduction | $16,000 (TI cap) |
Other scenarios
| QBI | TI | 20% QBI | 20% TI | Deduction |
|---|---|---|---|---|
| $50,000 | $200,000 | $10,000 | $40,000 | $10,000 |
| $100,000 | $80,000 | $20,000 | $16,000 | $16,000 |
| $0 | $50,000 | $0 | $10,000 | $0 |
Not modeled in v1
| Rule | In this calculator |
|---|---|
| W-2 wage / UBIA limit | Not included |
| SSTB specified services | Not included |
| Net capital gain haircut | Not included |
Related: US paycheck take-home, 1099 self-employment take-home.
$100,000 / $80,000 → $16,000, and it does not cut SECA: QBI 20% is a deduction.
Educational estimate
Not tax software and not CPA advice. Phase-outs and SSTB rules can reduce or eliminate the deduction.