For 2026, the QBI deduction stays simple below $201,750 (single) or $403,500 (MFJ). Above it, W-2 wages and SSTB rules take over, and this calculator applies them exactly as written.
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Estimate your qualified business income deduction, done properly.
The full Section 199A calculation: W-2 wage limit, property basis, SSTB phase-out and the taxable-income cap, all applied together.
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Crunch it →Below the 2026 threshold, the Section 199A deduction is a flat 20% of qualified business income; above it, the deduction is capped by a W-2 wage test and phased out entirely for specified service businesses once income clears $276,750 (single) or $553,500 (MFJ). The calculator applies the full three-part test, using the thresholds in IRS Rev. Proc. 2025-32, so your estimate holds up above or below the line.
Say you file single, your taxable income before the deduction is $250,000, your consulting-adjacent (but not SSTB) LLC produced $120,000 in QBI, and the business paid $30,000 in W-2 wages with no depreciable property. Start with the calculator's own constants: the single threshold is $201,750 and the phase-in range runs $75,000 wide, ending at $276,750, both per IRS Rev. Proc. 2025-32 (Oct. 9, 2025).
$250,000 sits above the threshold but below the top of the range, so you are in the phase-in band. Tentative deduction is 20% of $120,000, or $24,000. The wage limit is the greater of 50% of W-2 wages (0.5 × $30,000 = $15,000) or 25% of wages plus 2.5% of property (0.25 × $30,000 + 0 = $7,500), so the wage limit is $15,000. Since the tentative deduction exceeds that limit, the excess is $24,000 minus $15,000, or $9,000.
Next, find how far into the phase-in range you sit: ($250,000 minus $201,750) divided by $75,000, which comes out to roughly 64.3%. Pull back 64.3% of that $9,000 excess, about $5,790, from the tentative deduction: $24,000 minus $5,790 leaves $18,210. The taxable-income cap (20% of $250,000, or $50,000) does not bind here, so $18,210 is the answer. Change the wage figure or the income and the calculator above walks the same steps automatically.
The wage test surprises non-SSTB owners more than the SSTB phase-out surprises service businesses, mostly because the wage test is easy to forget until it applies. A sole proprietor with no employees and no equipment can clear the income threshold and discover the W-2 wage limit caps the deduction at zero, even though 20% of QBI would have been a healthy number on its own.
SSTB owners make a different mistake: assuming the phase-out is all-or-nothing at the lower threshold. It is not. The reduction is proportional across the phase-in range and only reaches zero at the top of that range. A specified service business sitting just above the threshold still gets most of the deduction, not none of it.
Confusing qualified business income with taxable income is another recurring error. QBI is net profit from the business, not gross revenue and not your total taxable income. The 20%-of-taxable-income cap is a separate, later step, and it only matters when it is lower than 20% of QBI, which is unusual for most filers but not impossible for someone with a large itemized deduction or a bad year for capital losses.
REIT dividends and qualified publicly traded partnership income get their own carve-out: they are eligible for the 20% deduction without going through the wage or SSTB tests at all, and people who lump them in with regular QBI either overstate or understate what they can claim. If your 1099-DIV shows Section 199A dividends, that figure runs through its own line on Form 8995 or 8995-A, separate from any pass-through business income.
The calculator above prints one of three status lines under your estimate, and each one means something specific about which rules applied.
Below the threshold: you see a line saying the full 20% of QBI applies with no wage test. That means your taxable income landed at or under $201,750 (single/HOH), $403,500 (MFJ), or $201,775 (MFS), and none of the W-2 wage, property, or SSTB restrictions came into play. The number shown is simply 20% of your QBI, capped only by 20% of taxable income if that happens to be lower.
In the phase-in range: the wage limit is only partially applied, scaled by how far your income sits between the threshold and the top of the range. This is the zone the worked example above walks through. Small changes in income here can move the deduction more than they would just below the threshold or well above the range, since you are straddling two different sets of rules at once.
Above the phase-in range: the wage limit applies in full, with no partial credit. If your business pays little in W-2 wages and holds little depreciable property, this is where the deduction can shrink sharply or disappear, regardless of how large your QBI is. Rerun the numbers with a higher wage figure to see how much that single input moves the result.
Get the threshold wrong and the wage test you thought did not apply, does. Run the real numbers first.