Estimate the 2026 Section 199A deduction for one trade or business, including the taxable-income cap, SSTB phase-in rules, and the W-2 wage/UBIA limitation. Multi-business, loss, REIT/PTP, cooperative, and entity-level cases can require additional IRS schedules.
QBI Deduction Calculator
20262026 $400 active-business minimum eligibility check
The formula
Capital-gain cap: qualified dividends and net capital gain can reduce the overall Section 199A cap used here. If you also want a separate estimate of tax on gains themselves, use the Capital Gains Tax Calculator; that is a different calculation from the QBI deduction.
A freelance writer with $80,000 QBI and $70,000 taxable income (below the $201,750 threshold): the simple case applies - 20% of the lesser figure (taxable income), for a deduction of $14,000.
Step-by-step guide
- Enter QBI for the trade or business. Use qualified items after the Section 199A adjustments that apply; ordinary book profit is not automatically identical to QBI. If you are first reviewing ordinary business profitability, the Net Profit Calculator can help with that separate accounting step, but its result should not be copied into QBI without the required tax adjustments.
- Enter taxable income before the QBI deduction. This determines the 2026 threshold zone and comes from the taxpayer's return, not only the business.
- Enter qualified dividends plus net capital gain. These reduce the taxable-income amount used for the overall 20% Section 199A cap.
- If income is above the threshold, enter Section 199A W-2 wages and UBIA. The limitation uses the greater of 50% of wages or 25% of wages plus 2.5% of qualified-property UBIA. The Payroll Calculator is useful for general payroll planning, but it is not a substitute for the specific Section 199A W-2 wage figure.
- Use the active-business minimum section only when relevant. The 2026 $400 minimum requires at least $1,000 of taxpayer-level aggregate QBI from active qualified trades or businesses. If you enter the aggregate override, include only businesses that satisfy the active/material-participation rule.
Filing status changes your threshold
Married Filing Separately is not simply "half" of the joint threshold -- it has its own figure, set independently by the IRS and slightly different from Single/Head of Household.
| Filing status | Phase-in starts | Upper end of phase-in range |
|---|---|---|
| Single / Head of Household | $201,750 | $276,750 |
| Married Filing Separately | $201,775 | $276,775 |
| Married Filing Jointly | $403,500 | $553,500 |
Why the 2026 phase-in range is wider
Before 2026, the phase-in range was a relatively narrow $50,000 (single) or $100,000 (MFJ) - meaning income could climb through the entire limitation zone quickly. The One Big Beautiful Bill Act (OBBBA, P.L. 119-21, signed July 4, 2025) widened this to $75,000 and $150,000 respectively, spreading the same limitation gradually over a much wider income band. For an SSTB owner (like a doctor, lawyer, or consultant) whose income sits just above the old upper threshold, this change can restore a meaningful deduction that would have been completely eliminated under the prior, narrower range.
Engineering and architecture are not SSTBs
Section 199A does not treat engineering or architecture as SSTBs. That means these businesses are not excluded solely because they provide professional services; above the income threshold, the W-2 wage/UBIA limitation can still reduce their QBI component.
What this deduction does not reduce
The QBI deduction does not reduce net earnings from self-employment for self-employment tax, and IRS Form 8995-A instructions state that net investment income is not reduced by the QBI deduction when computing NIIT. Use the Self-Employment Tax Calculator and NIIT Calculator for those separate calculations. For the broader federal picture after the deduction, compare the result with the Income Tax Calculator. Additional Medicare Tax is based on Medicare wages, RRTA compensation, and self-employment income rather than taxable income after the QBI deduction.
Which form do I file?
The IRS has published draft 2026 Forms 8995, 8995-A, and Schedule A (Form 8995-A), but the final 2026 instructions should be checked before filing. Under the current Form 8995/8995-A framework, the simplified Form 8995 is generally used at or below the applicable taxable-income threshold when the taxpayer is not a patron of a specified agricultural or horticultural cooperative; Form 8995-A handles the more detailed SSTB, W-2 wage, UBIA, loss-netting, aggregation, and cooperative calculations.
Common mistakes
Frequently asked questions
Why does the calculator ask for qualified dividends and net capital gain?
Because Section 199A generally limits the deduction to 20% of taxable income after subtracting net capital gain. Current IRS Form 8995-A instructions also tell individual filers to include qualified dividends in that limitation amount.
How does the W-2 wage and UBIA limit work?
When the limitation fully applies, the QBI component for a qualified trade or business cannot exceed the greater of 50% of its Section 199A W-2 wages or 25% of those wages plus 2.5% of UBIA of qualified property. Inside the phase-in range, the limitation is phased in rather than applied all at once.
How is an SSTB handled inside the phase-in range?
Only the applicable percentage of the SSTB's QBI, W-2 wages and UBIA is taken into account. The wage/property limitation can then phase in based on taxable income. Above the upper end of the range, the SSTB is generally excluded from the QBI deduction entirely.
Are engineering and architecture SSTBs for Section 199A?
No. Section 199A applies the SSTB service-field definition without treating engineering and architecture as SSTBs. Their QBI can still be limited by the W-2 wage/UBIA rules when taxable income is above the threshold.
Who can use the new $400 minimum deduction in 2026?
Section 199A(i) defines an applicable taxpayer as one with at least $1,000 of aggregate QBI from active qualified trades or businesses. Each business included in that aggregate must itself be a qualified trade or business in which the taxpayer materially participates under Section 469(h). A fully excluded SSTB contributes zero, but a different active qualified business can still make the taxpayer eligible for the $400 floor.
Sources
- Internal Revenue Service. Rev. Proc. 2025-32 / Internal Revenue Bulletin 2025-45 -- official 2026 Section 199A threshold and upper-end figures, plus the 2026 $400 / $1,000 minimum-deduction amounts.
- U.S. House Office of the Law Revision Counsel. 26 U.S.C. Section 199A -- current statutory text for the taxable-income/net-capital-gain cap, W-2 wage/UBIA limitation, SSTB applicable percentage, engineering/architecture treatment, and active-business minimum.
- Internal Revenue Service. Instructions for Form 8995-A -- current published IRS computation framework for SSTBs, W-2 wages, UBIA, losses, the capital-gain limitation, self-employment tax, and NIIT coordination.
- Congress.gov. Public Law 119-21, Section 70105 -- enacted amendments increasing the phase-in ranges and adding the active-qualified-business minimum.
- Internal Revenue Service. Draft tax forms -- lists draft 2026 Forms 8995 and 8995-A; final 2026 instructions should be checked before filing.
- Internal Revenue Service. Topic No. 560, Additional Medicare Tax -- explains that Additional Medicare Tax is based on Medicare wages, RRTA compensation, and self-employment income above the applicable threshold.
Related calculators
Continue with the Business Calculators hub, or use these closely related tools:
- Self-Employment Tax Calculator -- estimate self-employment tax separately from the QBI deduction.
- Income Tax Calculator -- place the deduction in the broader federal income-tax picture.
- NIIT Calculator -- estimate Net Investment Income Tax separately.
- Capital Gains Tax Calculator -- estimate tax on capital gains that are handled separately from QBI.
- Payroll Calculator -- general payroll planning; do not treat its output automatically as Section 199A W-2 wages.
- Depreciation Calculator -- model depreciation separately; depreciated value is not UBIA.
- Net Profit Calculator -- review ordinary business profitability before making tax-specific QBI adjustments.