QBI (Section 199A) Deduction Calculator
Free Section 199A qualified business income (QBI) deduction calculator. See your 20% QBI deduction after the taxable-income threshold, wage/UBIA limit, SSTB phase-out, and the new OBBBA minimum deduction.
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Additional Details
Additional Details
2026 Section 199A QBI Deduction
$16,000.00
Estimated • Based on your inputs
Your Phase-In Status
Below the threshold amount -- full 20% deduction, no wage/UBIA limit or SSTB exclusion applies.
Detailed Breakdown
Disclaimer: This calculator provides estimates for informational purposes only. Results should not be considered financial, tax, or legal advice. Consult a qualified professional for your specific situation.
How This Calculator Works
Calculation methodology and assumptions
The Sec. 199A deduction equals the lesser of (a) 20% of your qualified business income (QBI) plus 20% of qualified REIT dividends/PTP income, or (b) 20% of your taxable income minus net capital gain. Below the taxable-income threshold for your filing status ($403,500 married filing jointly / $201,750 single & head of household / $201,775 married filing separately, for 2026), the full 20% QBI amount applies with no wage or business-type limitation. Within the phase-in range above that (widened to $150,000 for joint filers and $75,000 for others by the One Big Beautiful Bill Act), a specified service trade or business (SSTB) has its QBI, wages, and UBIA phased down toward zero, while a non-SSTB instead phases down toward the W-2 wage/UBIA limitation (the greater of 50% of W-2 wages, or 25% of W-2 wages plus 2.5% of the unadjusted basis of qualified property). Above the top of the range, SSTBs get no deduction and non-SSTBs are fully limited to the wage/UBIA cap. New for 2026, the OBBBA also guarantees a $400 minimum deduction for anyone materially participating in a business with at least $1,000 of QBI, on top of making the Sec. 199A deduction permanent (it had been scheduled to expire after 2025). This calculator models a single qualified trade or business; taxpayers who aggregate multiple businesses or have income from multiple REITs/PTPs should treat this as an estimate and consult IRS Form 8995-A for the complete computation.
How to Use This Business Calculator
- 1
Enter your revenue or sales figures
Input monthly or annual revenue. For break-even analysis, enter your product's selling price per unit. For profit margin analysis, enter total revenue and cost of goods sold.
- 2
Input your costs
Separate fixed costs (rent, salaries, insurance — don't change with sales volume) from variable costs (materials, shipping, commissions — scale with units sold).
- 3
Set your pricing
For break-even: enter the variable cost per unit and selling price per unit. The calculator determines how many units you need to sell to cover all fixed costs.
- 4
Review profitability metrics
The calculator provides gross margin (revenue minus COGS), operating margin (after operating expenses), and net margin (after all costs including taxes). Each reveals a different layer of profitability.
Example Calculation
Let's analyze a small e-commerce business.
A handmade candle business sells candles at $28 each. Variable cost per unit: $9 (wax, wicks, jars, fragrance, shipping). Fixed monthly costs: $2,400 (studio rent $1,200, Shopify + marketing $800, insurance $200, miscellaneous $200). Break-even point: $2,400 ÷ ($28 − $9) = 126 candles/month.
Result: Break-even: 126 candles/month ($3,528 revenue). At 200 candles/month: Revenue $5,600, COGS $1,800, Fixed Costs $2,400, Net Profit $1,400 (25% net margin). The contribution margin of $19/candle means every candle sold above 126 adds $19 directly to profit. Doubling price to $56 (with premium positioning) would cut break-even to 63 units.
What Affects Your Results
Fixed vs Variable Costs
Businesses with high fixed costs need higher volume to break even but become very profitable at scale. Low fixed costs mean faster break-even but less operating leverage.
Pricing Strategy
A 10% price increase with no volume loss drops directly to the bottom line. For most businesses, pricing is the most powerful profit lever — more impactful than cost cutting.
Cost of Goods Sold
COGS includes direct materials, labor, and manufacturing costs. Negotiate volume discounts with suppliers, optimize shipping, and reduce waste to improve gross margin.
Sales Volume
Operating leverage means that once fixed costs are covered, each additional unit sold generates profit at the contribution margin rate. This is why scale matters.
Operating Expenses
Marketing, rent, insurance, payroll, and admin costs eat into gross profit. Track operating expense ratio (OpEx / Revenue) — for healthy small businesses, aim for 20-35%.
Tips & Best Practices
- Know your contribution margin per product — it tells you exactly how much each sale contributes to covering fixed costs and generating profit.
- Gross margin above 50% is generally healthy for product businesses. Below 30% means pricing or COGS needs attention. Service businesses should target 60%+ gross margins.
- Check your state's business tax obligations. Beyond income tax, you may owe franchise tax, gross receipts tax, or Business & Occupation (B&O) tax depending on the state.
- Track margins monthly. If gross margin is declining, investigate whether COGS is rising (supplier prices, shipping costs) or if you're discounting too aggressively.
- Separate operating expenses from COGS in your bookkeeping. Mixing them masks your true product profitability and makes it harder to identify cost reduction opportunities.
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StateCalc Team
Editorial Team
The StateCalc team builds free financial calculators using data from official government sources including the IRS, U.S. Census Bureau, BLS, and state revenue departments. All formulas are validated by an automated test suite and cross-referenced against published data.
Our editorial standardsFrequently Asked Questions
What is the QBI deduction, in plain terms?
It lets owners of sole proprietorships, partnerships, S corporations, and some trusts/estates deduct up to 20% of their qualified business income from their taxable income -- effectively taxing that income at 80% of your normal rate. It's available whether you itemize or take the standard deduction, and is separate from (and in addition to) any other business expense deductions you already claimed.
Is the QBI deduction still around in 2026, or did it expire?
It's still here -- and it's now permanent. Under the original 2017 Tax Cuts and Jobs Act, Sec. 199A was scheduled to sunset after tax year 2025. The One Big Beautiful Bill Act (signed July 2025) removed that sunset, made the 20% deduction permanent, and widened the phase-in ranges (from $100,000/$50,000 to $150,000/$75,000 for joint/other filers) starting in 2026, per IRS Rev. Proc. 2025-32.
What counts as a "specified service trade or business" (SSTB)?
The law lists specific fields: health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing/investment management, trading, dealing in securities, and any business where the principal asset is the reputation or skill of one or more of its employees/owners. Notably, engineering and architecture are specifically carved OUT of the SSTB definition and never lose the deduction for that reason alone. Below your threshold amount, the SSTB label doesn't matter at all -- everyone gets the full 20%.
What is the new $400 minimum QBI deduction for 2026?
The One Big Beautiful Bill Act added Sec. 199A(i), guaranteeing a $400 minimum deduction (for tax years beginning after Dec. 31, 2025) to any taxpayer who materially participates in a qualified trade or business with at least $1,000 of QBI -- even if the regular wage/UBIA/SSTB-limited calculation would otherwise produce less (or zero). Both the $400 and $1,000 figures are unindexed for 2026 and begin adjusting for inflation in later years, per IRS Rev. Proc. 2025-32.
Do I need W-2 wages or business property to get this deduction?
Only if your taxable income is above the threshold amount for your filing status. Below the threshold, every qualifying business gets the full 20% QBI deduction regardless of wages paid or property owned. Above the threshold, the wage/UBIA test (and, for SSTBs, a full exclusion) starts to apply -- which is why many very profitable one-person consultancies with no employees see their deduction shrink at higher income levels.
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