QBI Deduction Calculator 2026: Methodology and Sources

2026 thresholds used

• Single and head of household: threshold $201,750, phase-in end $276,750
• Married filing jointly: threshold $403,500, phase-in end $553,500
• Married filing separately: threshold $201,775, phase-in end $276,775

Calculation approach

1. Compute 20% of qualified business income.
2. Add 20% of qualified REIT/PTP income if entered.
3. Apply threshold logic based on filing status.
4. For above-threshold cases, apply wage and UBIA limits.
5. For SSTBs, phase out the business component through the applicable income range.
6. Cap the final deduction at 20% of taxable income minus net capital gain.

Assumptions and limits

• The tool is a planning calculator, not a full Form 8995-A engine.
• Aggregation elections, carryforwards, and multiple-business coordination are outside scope.
• The SSTB treatment is simplified for readability.
• Users should compare the result against current IRS form instructions for complex returns.

Primary sources

• IRS inflation-adjustment guidance for 2026 Section 199A thresholds
• IRS Form 8995 and Form 8995-A instructions
• IRS qualified business income deduction guidance

Related pages: calculator and guide.

Update policy

We update this page when the IRS publishes new Section 199A thresholds, revises the Form 8995 or 8995-A instructions, or issues guidance that changes how the wage-and-property or SSTB rules should be summarized in a planning calculator.

Estimate quality note

Below-threshold cases are usually closer to the final filing result because the rule set is simpler. Above-threshold cases, especially those involving SSTBs, multiple businesses, or aggregation questions, should be treated as informed planning estimates rather than full return-engine outputs.

Above-threshold limit treatment

For above-threshold cases, the calculator compares the tentative QBI component with the wage-and-property limitation and then applies phase-in logic based on filing status. For SSTB cases, the tool uses a simplified reduction approach that mirrors the main direction of the rule without trying to recreate every advanced worksheet detail in Form 8995-A.

What the calculator simplifies

This page is intentionally built around one business-style input set so users can understand the moving parts. It does not model every aggregation election, negative-QBI carryforward, multiple-entity interaction, or specialized allocation rule. Those details can matter on real higher-income returns, which is why the output should be treated as a planning estimate when the fact pattern is complex.

Interpretation note

The output is most reliable as a planning comparison tool: it helps users see whether the deduction is being limited by taxable income, the wage-and-property rule, or SSTB treatment. That is often the most useful question before someone opens the full IRS worksheets.