What is the QBI deduction (§199A) and who can claim it?

§199A lets eligible pass-through owners (sole proprietors, partnerships, S corporations, some trusts) deduct up to 20% of qualified business income on the personal return. W-2 employees and C corporations do not qualify.

What are the QBI income thresholds for 2026?

The single and joint thresholds are indexed annually for inflation. Above the threshold, the deduction is limited by W-2 wages paid by the business plus UBIA on qualified property — below it, the deduction is generally the full 20% with no limit. Confirm the threshold amounts on the current-year Form 8995 instructions.

How do W-2 wages and UBIA limit my QBI deduction?

Above the threshold, the deduction cannot exceed the greater of (a) 50% of W-2 wages paid by the business, or (b) 25% of W-2 wages plus 2.5% of UBIA on qualified property. Owners above the threshold with low payroll frequently lose the deduction entirely.

Are accountants, lawyers, and consultants SSTBs?

Yes — health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage, investing/investment management, trading, and dealing in securities are all on the §199A(d)(2) SSTB list. SSTBs do not disqualify the deduction under the threshold, but they cannot claim it above the threshold.

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QBI deduction (§199A)

QBI deduction (§199A): who qualifies and how to claim

The §199A qualified business income deduction for pass-through owners, sole proprietors, and partnerships — thresholds, W-2 wage limits, SSTBs, Form 8995, and how to compute it.

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Citation backbone

This article rests on the IRC section below — every recommendation Taxerity.AI surfaces cites this same scaffolding.

IRC § 199A Form 1040-SB Instructions

Who can claim this

Who qualifies for the qbi deduction (§199a)

Pass-through entity with W-2 wages and UBIA support on qualifying property — single, non-SSTB trade.

Schedule K-1 carries qualified business income, W-2 wages paid, and UBIA on qualified property (redacted to tier).
Owner above the §199A income threshold — needs the wage/UBIA limitation calculation.
Trade is not on the §199A(d)(2) SSTB list (no health, law, accounting, consulting, athletics, financial services).

How to claim — step-by-step

How to claim the qbi deduction (§199a)on this year's return

Schedule K-1 carries qualified business income, W-2 wages paid, and UBIA on qualified property (redacted to tier).
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Owner above the §199A income threshold — needs the wage/UBIA limitation calculation.
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Trade is not on the §199A(d)(2) SSTB list (no health, law, accounting, consulting, athletics, financial services).
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What catches practitioners off guard

The risk to review

Why AI + human review matters here

QBI above the income threshold without sufficient W-2 wages or UBIA zeroes out the deduction — verify the wage limitation before claiming.

Taxerity.AI surfaces this and similar items for your firm's reviewer. The AI does the research; you keep the final judgment on whether the workload and evidence pattern warrant the deduction on a specific client's return.

FAQ

Common questions about the qbi deduction (§199a)

Quick answers to the questions solo CPAs and enrolled agents ask us most often about this deduction.

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