| 20% of qualified business income | $120,000 × 20% | $24,000 |
| Threshold for your status | $201,750 — you are under it | full 20% |
- Below the threshold the SSTB question does not matter at all. Every trade gets the full 20%.
- Simplified: the deduction is also limited to 20% of taxable income excluding net capital gain, and the wage limit has a property alternative. At the thresholds this rarely changes the answer, but it can.
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The figures this uses
| Figure | 2026 | Source |
|---|---|---|
| QBI threshold and phase-in range | $403,500 / $553,500 married filing jointly · $201,775 / $276,775 married filing separately · $201,750 / $276,750 all other returns | irs.gov |
| QBI minimum deduction | $400 from 2026 where qualified business income from an active trade or business is at least $1,000 | irs.gov |
How the calculation works
The qualified business income deduction is 20% of the profit of a business, taken on Form 1040 whether or not you itemise. Where you stand against two figures, a threshold and a ceiling, decides how much of the 20% survives. For 2026:
| Filing status | Threshold | Ceiling |
|---|---|---|
| Married filing jointly | $403,500 | $553,500 |
| Married filing separately | $201,775 | $276,775 |
| All other returns | $201,750 | $276,750 |
The calculator measures your taxable income before this deduction against them.
- Below the threshold. The full 20% of qualified business income, limited to 20% of taxable income. The type of work does not matter.
- Between the threshold and the ceiling. A specified service business loses the deduction in proportion to how far through the range you are. Any other business has a limit of 50% of the W-2 wages it paid phased in over the same range.
- Above the ceiling. A specified service business gets nothing. Any other business is limited to 50% of the W-2 wages it paid, which for a sole proprietor with no employees is nothing.
- The 2026 minimum. Where the result is under $400 and qualified business income is at least $1,000, the calculator raises it to $400, except for a specified service business above the threshold.
What it leaves out
- The property alternative. Above the threshold the wage limit has an alternative that also counts the business's qualified property. The calculator uses wages only.
- Net capital gain. The limit is strictly 20% of taxable income less net capital gain.
- More than one business. The calculator takes a single figure of qualified business income.
Whether your work is a specified service at all is the question most readers get wrong: see Is my work an SSTB?, and for the phase-in range worked through, the therapist's phase-out.
Common questions
What is qualified business income?
Why does it ask whether my work is a specified service business?
What is the $400 minimum?
Does the deduction lower my self-employment tax?
This calculator is for educational purposes only and does not constitute tax, legal, or financial advice. It covers United States federal tax and simplifies in the ways noted beside each result. Consult a qualified tax professional about your situation.