The Qualified Business Income deduction lets many freelancers, sole proprietors and LLC owners deduct up to 20% of their business profit before calculating income tax — and it’s easy to miss entirely if your tax software doesn’t flag it or your accountant doesn’t bring it up. This calculator estimates what it’s worth for you.
| Phase-out status | – |
|---|---|
| 20% of qualified business income (after phase-out) | $0 |
| 20% of taxable income limit | $0 |
Why this deduction phases out at higher income
Below the 2026 threshold — $201,750 for single filers, $403,500 for married filing jointly — the deduction is simply 20% of your qualified business income, no complications. Above that, it starts phasing out over a $75,000 range ($150,000 for joint filers), and how quickly it disappears depends on whether your work counts as a “specified service trade or business” (consulting, law, accounting, financial services, health, and similar fields) and whether your business pays W-2 wages.
Here’s the part that matters most for solo freelancers: once you’re in or above the phase-out range, the deduction becomes limited by the wages your business pays and the depreciable property it owns. Most one-person freelance businesses pay no W-2 wages and own little qualifying property, so in practice the deduction shrinks toward zero across the phase-out range regardless of whether your specific field counts as an SSTB — which is the assumption this calculator uses. If you do pay yourself or employees a W-2 wage (common once you’ve made an S-corp election), the real number could be higher than shown here, and it’s worth running the exact numbers with a tax professional.
Do I need to do anything special to claim the QBI deduction?
It’s generally calculated automatically by tax software based on your Schedule C or K-1 income, but it’s still worth checking it was actually applied, since it’s easy to miss if your business income is entered incorrectly or your software doesn’t handle it well.
What counts as a specified service trade or business (SSTB)?
Fields like law, accounting, consulting, financial services, health, and performing arts are generally treated as SSTBs. Many freelance and creative fields outside those categories are not, which matters more the higher your income climbs above the threshold.
Is the QBI deduction permanent?
Recent legislation made the 20% deduction permanent and widened the phase-out ranges starting in 2026, but tax law changes over time, so it’s worth confirming current rules each filing season.
This calculator uses 2026 federal thresholds and a simplified assumption of no W-2 wages or qualified property, which fits most solo freelance businesses. It’s a general estimate, not tax advice — confirm your actual deduction with a tax professional or tax software.