§199A QBI Deduction Calculator
Estimate your Qualified Business Income deduction at any income level. Models the three-zone treatment (below threshold, phase-in, above upper), the SSTB phase-out for service businesses (law, medicine, consulting, financial services), and the W-2/UBIA limit. Surfaces what restructuring moves unlock more deduction.
Pass-through entities only — sole prop, partnership, S-corp, LLC taxed as partnership or S-corp. C-corps don't qualify (they get the flat 21% corporate rate instead). 3-year amendment window means 2022–2024 returns are still in play for missed deductions.
Line 15 of Form 1040 before applying the §199A deduction. Includes business income and all other taxable sources (W-2, dividends, etc.).
Net business income from your pass-through entity (Sch C / K-1 / S-corp). Excludes reasonable W-2 wages paid to yourself, guaranteed payments, investment income, and capital gains.
Total W-2 wages paid by the qualified business — staff payroll AND your own reasonable salary if S-corp. Matters above the threshold: limit is greater of 50% × wages OR 25% × wages + 2.5% × UBIA.
Unadjusted Basis Immediately after Acquisition of qualified depreciable property still within its recovery period. Equipment, vehicles, leasehold improvements. Doesn't include land or fully-depreciated assets. Only matters if you're above the threshold and need the W-2+UBIA path.
Estimated §199A QBI deduction
$24,976
Tentative (20% × QBI)
$56,000
Est. federal tax savings (35% marginal)
$8,742
In phase-in zone: the W-2/UBIA limit applies partially (45% of full deduction protected). Each $1K of taxable income above $394,600 costs you proportional deduction. Retirement plan contributions move you back toward the full deduction.
Phase status: In phase-in zone ($394,600–$494,600) — partial limit.
W-2/UBIA limit: $60,000 — greater of 50% × W-2 wages or 25% × W-2 + 2.5% × UBIA.
A Fruxal Recovery Broker reviews your last 3 years of returns for missed §199A deductions, identifies optimization moves (retirement plan layering, W-2/SSTB restructuring, entity election review), and coordinates 1040-X amendments with your CPA. Free 15-min diagnostic.
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Disclaimer: Educational estimate using 2025 thresholds. §199A was originally scheduled to sunset Dec 31, 2025 under TCJA; verify current-year status with a CPA. Actual deduction depends on aggregation elections, REIT/PTP income, net capital gains adjustments, and entity structure. Not tax advice.
The three-zone treatment
§199A treats taxpayers in one of three zones based on taxable income before the deduction:
- Below threshold (Single <$197,300 / MFJ <$394,600, 2025 figures): full 20% × QBI deduction. No SSTB restriction, no W-2/UBIA limit. The biggest "easy money" zone — every pass-through owner here should be claiming it.
- Phase-in zone (the $50K above threshold for Single, $100K for MFJ): the W-2/UBIA limit phases in linearly. SSTB owners also start losing the deduction proportionally. This is the danger zone — a $30K bonus can vaporize $20K of deduction.
- Above upper threshold: SSTB owners get $0. Non-SSTB owners are capped at the W-2/UBIA limit, which often means the deduction is significantly smaller than 20% × QBI unless the business has substantial payroll.
The SSTB trap (and the way out)
Specified Service Trade or Business owners — lawyers, doctors, dentists, consultants, accountants, financial advisors — face the worst §199A outcome. Above the upper threshold, they get $0 deduction, regardless of how much W-2 they pay or property they own.
For a successful SSTB owner with $500K of taxable income and $300K of QBI, that's a missed deduction of up to $60K — worth roughly $22K in federal tax at a 37% marginal rate. Every year. Compounding.
The mechanical way out: drop taxable income below the threshold. Strategies:
- Max retirement plan contributions — SEP-IRA, Solo 401(k), or Defined Benefit / Cash Balance plans can shelter $200K+/yr for high earners
- HSA contributions ($4,300 single / $8,550 family, 2025)
- Family employment — paying a spouse or adult child a reasonable wage shifts income to a lower bracket
- Income-shifting between spouses if MFJ separating produces a better aggregate outcome
- Deferred compensation arrangements (non-qualified deferred comp can push income to lower-earning years)
For a $50K retirement plan contribution that drops you back below threshold: the contribution defers $18K of federal tax AND recovers a $20K+ QBI deduction worth $7K+. Net positive of ~$25K in year one — before counting investment growth on the deferred amount.
Non-SSTB owners: the W-2 lever
Architects, engineers, manufacturers, retailers, and most other non-service businesses don't face the SSTB trap. Above the upper threshold, the deduction is capped at the GREATER of (a) 50% × W-2 wages or (b) 25% × W-2 + 2.5% × UBIA of qualified property.
For S-corp owners, this creates a tension: increasing your reasonable salary unlocks more §199A deduction (path A scales with W-2), but salary costs ~7.65% in employer payroll tax that distributions don't. The optimization point depends on QBI level — but a careful study often finds a different salary number than the boilerplate "60% of profits" rule of thumb.
For capital-intensive businesses (real estate operators, manufacturers with heavy equipment), the UBIA path (b) often dominates. Strategic acquisition timing of qualifying property within the 10-year recovery period window can unlock substantial deduction.
Further reading
How §199A QBI Works in 2026 — A Pass-Through Owner's Field Guide →8-min read · Three-zone treatment, SSTB trap rescue strategies, the $57K-saved dentist example, what to do if you're already in Zone 3.
Estimate looks promising?
A Fruxal Recovery Broker reviews your last 3 years of returns for missed or under-claimed §199A deductions, identifies the optimization moves that unlock more (retirement plan layering, W-2/SSTB restructuring, aggregation elections, entity election review), and coordinates Form 1040-X amendments with your CPA. Free 15-minute diagnostic. 30% contingency on confirmed recoveries — only after the IRS confirms the refund.
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FAQ
What is the §199A QBI deduction?
A personal-side federal deduction of up to 20% of qualified business income for owners of pass-through entities (sole prop, partnership, S-corp, LLC). Created by TCJA. Sits on top of the business's normal deductions.
What's an SSTB?
Specified Service Trade or Business. Law, medicine, accounting, consulting, financial services, performing arts, athletics — basically service businesses where the principal asset is the reputation or skill of the owner/employees. Above the upper income threshold, SSTBs get $0 deduction.
How do I keep the deduction at high income?
For SSTB owners: drop taxable income below the threshold via retirement plan layering, HSA contributions, family employment, or deferred comp. For non-SSTB owners: increase W-2 wages paid by the business, or acquire qualifying depreciable property to unlock the UBIA path.
Is §199A still around in 2026?
It was originally scheduled to sunset Dec 31, 2025 under TCJA. Various 2024-2025 tax bills addressed extension. Verify current-year status with a CPA. Either way, the 3-year amendment window means 2022, 2023, and 2024 returns are still in play for missed deductions.
Can I aggregate multiple businesses?
Yes — common ownership + similar operations can be aggregated for the W-2/UBIA test under Reg §1.199A-4. Aggregation can be a powerful lever for owners who run a labor-rich SSTB alongside a capital-rich non-SSTB. The election is annual but consistent.
Why doesn't my C-corp qualify?
§199A applies only to pass-through entities. C-corps got their own benefit under TCJA — a flat 21% corporate tax rate (down from 35%). The two are mutually exclusive by entity type. If you operate as a C-corp but earnings flow as pass-through, the entity election may itself be the recovery move.