Test your 20% Qualified Business Income (QBI) deduction under Section 199A, including the income thresholds, the W-2 wage limitation, and the SSTB phase-out for service businesses. See exactly how much of the full 20% you actually keep. Instant and private.
Section 199A — 20% pass-through deduction
The Qualified Business Income deduction lets owners of pass-through businesses — sole proprietorships, partnerships, S-Corps, and LLCs — deduct up to 20% of their qualified business income. Made permanent by the 2025 OBBBA, it's one of the largest tax breaks available to small business owners, but how much you keep depends entirely on your taxable income.
Below the 2026 income thresholds (about $197,300 single / $394,600 married filing jointly), you simply get 20% of QBI, regardless of business type. Above the threshold, two limits kick in: the W-2 wage limitation (your deduction can't exceed 50% of the W-2 wages your business pays), and for Specified Service Trades or Businesses (SSTBs — health, law, accounting, consulting, financial services, and similar), the deduction phases out completely. The phase-out happens gradually over the next $75,000 (single) / $150,000 (MFJ) of income.
Below ~$197K single / ~$395K MFJ, you get the clean 20% with no wage limit and no SSTB penalty.
Above the threshold, your deduction is capped at 50% of the W-2 wages your business pays out.
Service businesses (law, health, consulting, finance) lose the deduction entirely once fully over the range.
The deduction also can't exceed 20% of your taxable income minus net capital gains.
If you own a pass-through business in the United States — an LLC, S-Corp, partnership, or sole proprietorship — the Qualified Business Income (QBI) deduction under Section 199A can cut 20% off your business income before tax. Made permanent by 2025 tax reform, it is one of the most valuable and most misunderstood breaks in the code, and "QBI deduction calculator," "199A limit 2026," and "do I qualify for QBI" are searched by millions of American filers each spring. This tool tests your eligibility and shows your real deduction.
Below the 2026 thresholds (about $197,300 single / $394,600 married filing jointly) the full 20% is yours with no strings. Above them, the W-2 wage limitation and the Specified Service Trade or Business (SSTB) phase-out — affecting doctors, lawyers, accountants, consultants, and financial advisors — can shrink or eliminate it. The gauge above shows exactly how much of the full 20% you keep.
A single freelance designer has $150,000 of QBI and $200,000 of taxable income — just over the 2026 threshold. With no W-2 wages, the deduction begins to phase down from the full $30,000 (20% of QBI) to about $28,920, roughly 96% of the maximum. Staying under the income threshold or paying W-2 wages would restore the full 20%.
Sole proprietors, single-member LLCs, S-Corp and partnership owners, independent contractors, and high-earning professionals (including doctors, lawyers, accountants, and consultants checking SSTB limits) claiming the Section 199A pass-through deduction in the United States.