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Free New OBBBA Updated §199A Pass-Through

QBI Deduction Calculator
(Section 199A)

Calculate the 20% Qualified Business Income deduction for pass-through entities — sole proprietors, partnerships, and S-Corp owners. Handles the three calculation zones (below threshold, phase-in, fully phased out) and the SSTB rules. Updated for the One Big Beautiful Bill Act (OBBBA) signed July 2025: §199A is now permanent with expanded phase-in ranges and a new $400 minimum deduction effective 2026.

★ OBBBA Update — Effective 2026
The One Big Beautiful Bill Act (signed July 4, 2025) made §199A permanent — no more 2025 sunset. For 2026, the phase-in range expands from $50K to $75K (single) and from $100K to $150K (MFJ), letting more taxpayers keep partial deductions. A new $400 minimum deduction kicks in if QBI ≥ $1,000 and you materially participate.

Inputs

Tax year & status
Income
Business
Is this an SSTB?
Specified Service Trade/Business: law, health, accounting, consulting, financial services, brokerage, athletics, performing arts, investment management.
Material participation
Active involvement in the business (relevant for 2026 $400 minimum).
Other

How §199A actually works (the short version)

Three income zones determine your QBI deduction:

1. Below the threshold — simple 20%

If your taxable income (before QBI deduction) is at or below the threshold, your QBI deduction is the lesser of 20% × QBI or 20% × (Taxable Income − Net Capital Gains). No wages or UBIA test, SSTB status doesn't matter. Form 8995 (simplified) handles this.

2. In the phase-in range — partial deduction, mechanics matter

The wages/UBIA test phases in linearly for non-SSTBs. For SSTBs, the QBI itself, wages, and UBIA all phase out linearly — at the top of the range, an SSTB gets nothing. The 2026 OBBBA expanded these ranges: single went from $50K wide to $75K wide; MFJ went from $100K wide to $150K wide.

3. Above the phase-out — wages/UBIA test applies fully (non-SSTB only)

Non-SSTB businesses get the lesser of 20% × QBI or the greater of:

· 50% × W-2 wages paid
· 25% × W-2 wages + 2.5% × UBIA of qualified property

SSTBs get $0 above the phase-out — except for the new OBBBA $400 minimum if material participation + QBI ≥ $1,000 (effective 2026).

What's an SSTB?

Per IRC §199A(d)(2), a Specified Service Trade or Business includes:

Health Law Accounting Actuarial science Performing arts Consulting Athletics Financial services Brokerage services Investing/investment management Trading Dealing in securities Any trade where principal asset is reputation/skill of one or more employees

Notably not SSTBs: engineering, architecture, software development, real estate (generally), most manufacturing, and most retail.

Strategies for SSTB owners above the threshold

· Defer income into the next year to stay below threshold (Section 199A is income-based, not business-based).
· Increase retirement contributions — Solo 401(k), SEP-IRA, defined benefit plans reduce taxable income.
· Bunch deductions in years where SSTB phase-out is binding (large charitable contributions, etc.).
· Separate non-SSTB activities into a different entity if the activity has its own economic substance (e.g., a real estate holding company for the building separate from the SSTB operating company).
· Aggregate eligible non-SSTBs (per Reg. §1.199A-4) to combine wages/UBIA across related businesses for the wages cap test.

Related Tools
→
Reasonable Compensation Calculator (S-Corp)— W-2 wages set here flow directly into the §199A wages cap
 →
Self-Employed Retirement Plan Calculator— Retirement contributions reduce taxable income → may keep you below QBI threshold
 →
S-Corp Audit Exposure Calculator— Reclassification risk if W-2 wages aren't reasonable
 →
Federal Tax Estimator— Full tax computation including QBI
⚠️ Methodology & scope
This calculator handles one trade or business at a time. For multiple businesses with aggregation, multiple SSTBs, REIT/PTP dividends, agricultural/horticultural cooperative patrons, or carryover losses from prior years, use Form 8995-A and its instructions (or your tax software).

2025 thresholds (TCJA): Single/HoH/MFS phase-in starts at $197,300, fully phased out at $247,300 (+$50K range). MFJ phase-in starts at $394,600, fully phased out at $494,600 (+$100K range).

2026 thresholds (OBBBA): Single/HoH/MFS phase-in starts at $201,750, fully phased out at $276,750 (+$75K range). MFJ phase-in starts at $403,500, fully phased out at $553,500 (+$150K range). New $400 minimum deduction if QBI ≥ $1,000 and material participation.

The phase-in mechanics (specifically the gradual application of wages/UBIA limits for non-SSTBs and gradual exclusion of SSTBs) follow Treas. Reg. §1.199A-1(d)(2)(iv). This is a planning estimate — your actual deduction may vary based on full facts. Form 8995-A is the authoritative computation for complex cases.