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QBI deduction,
the 2026 math shown step by step.
Calculate your Section 199A pass-through deduction with the widened 2026 OBBBA thresholds, the real W-2 wage/UBIA limitation, the SSTB phase-out to $0, and the new $400 minimum deduction — not just a flat 20% estimate.
Married filing separately isn't supported — MFS has its own (nearly identical) 2026 thresholds, but this cluster of calculators only models single, head of household, and joint filing.
SSTB categories: Health, Law, Accounting, Actuarial science, Performing arts, Consulting, Athletics, Financial services, Brokerage services, Investing / investment management, Trading, Dealing in securities. Below the threshold, SSTB status doesn't matter — the full 20% applies either way. Above the upper threshold, an SSTB's deduction phases all the way to $0.
Drives eligibility for the new 2026 $400 minimum deduction (requires ≥ $1,000.00 of QBI too) — IRC §469(h) material participation, not just ownership.
$30,000.00
Below threshold — full 20%, no limits apply
How the math works
For an S-Corp owner, your W-2 salary does NOT count toward QBI — only K-1 pass-through profit does. But your salary does count toward the W-2 wages used in the wage-limitation formula above. Below the phase-in threshold this costs nothing; above it, a salary set too low (purely to minimize SE/payroll tax) can shrink this very deduction. See the S-Corp Tax Savings Calculator for the salary-optimization side of this same trade-off.
Field guide
How the Section 199A deduction actually works in 2026.
Pass-through business owners — sole proprietors, partners, and S-Corp shareholders — can deduct up to 20% of their qualified business income (QBI). Below a taxable-income threshold, that's the whole story: full 20%, no wage limits, no penalty for being a service business. Above it, two separate limitations start to bind, and this calculator shows exactly how.
The 2026 thresholds — widened by OBBBA, not just indexed
For 2026, the threshold where limitations start to matter is $201,750 for single and head-of-household filers, and $403,500 for married filing jointly (IRS Rev. Proc. 2025-32). Limitations fully apply once taxable income clears the phase-in band — $276,750 single/HoH, $553,500 MFJ. That band itself widened this year: OBBBA expanded it from the old $50,000/ $100,000-wide range to $75,000/$150,000 — a genuine legislative change, not routine inflation creep, and it means more taxpayers land in the gentler phase-in zone rather than hitting the full wage limitation outright.
Below the threshold: nothing to calculate
If your taxable income (before this deduction) is at or below the threshold, you get the full 20% of QBI — no W-2 wage test, no UBIA test, and no SSTB penalty, even if your business is in a listed service field. This covers a large share of freelancers and small-business owners on this site outright.
Above the threshold: the wage/UBIA limitation
Once income clears the upper threshold, a non-SSTB business's deduction is capped at the greater of 50% of the W-2 wages the business paid, or 25% of W-2 wages plus 2.5% of the unadjusted basis (UBIA) of qualified property. A solo consultant with no employees and no equipment can see this limit fall to $0 — a real trap for high-earning one-person service businesses, even non-SSTB ones.
SSTBs: a cliff, not just a limit
Specified Service Trades or Businesses — health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, investment management, trading, and dealing in securities — face something harsher above the upper threshold: the deduction phases all the way to $0, not just down to a wage-based floor. Inside the phase-in band, both the QBI/wages/UBIA figures and the wage-limitation math are scaled down together, so the result lands continuously between the full 20% at the lower threshold and exactly $0 at the upper one.
The 2026 wrinkle: a $400 floor
OBBBA added a new minimum deduction of $400 for any taxpayer with at least $1,000 of QBI from a business they materially participate in (IRC §469(h) — actual participation, not passive ownership). It's aimed at small or marginal side businesses whose regular 20%-of-QBI calculation would otherwise round to a token amount.
The S-Corp salary tension
Your own S-Corp W-2 salary is never QBI — only K-1 pass-through profit is. Our S-Corp Tax Savings Calculator frames a lower reasonable salary as SE-tax-optimal, and below this deduction's threshold, a lower salary costs you nothing on the QBI side either — it's a clean win-win, down to the reasonable-compensation floor. Above the threshold, it's genuinely two-sided: that same salary is also what the 50%-of-wages limitation is measured against, so a salary set too low can shrink the wage-limitation ceiling on this very deduction. The two calculators can point in different directions for higher-earning S-Corp owners — model both before picking a number.
Disclaimer
This calculator models one qualified trade or business and does not handle multi-business aggregation elections, REIT dividend or PTP income (which get their own uncapped 20% component), or net capital gain reducing the overall taxable-income cap. It's for planning purposes only — confirm your specific numbers with a tax professional, particularly if you're near the SSTB phase-out cliff or considering an S-Corp aggregation election.
2026 threshold and phase-in amounts verified directly against IRS Rev. Proc. 2025-32 §4.26. The $400 minimum deduction and $1,000 QBI eligibility floor (OBBBA §70105, adding IRC §199A(i)) verified against the same primary source. Wage/UBIA limitation and SSTB phase-out mechanics follow long-standing Treas. Reg. §1.199A-1, unchanged by OBBBA except for the dollar thresholds. Rates, thresholds, and formulas are checked against IRS Rev. Proc. 2025-32 and updated when the underlying rules change.