If you freelance or run a pass-through business, Section 199A lets you deduct up to 20% of your qualified business income (QBI) on Form 8995 or 8995-A. Most freelancers (consulting, design, writing, law, health, accounting, financial services) are a specified service trade or business (SSTB), so the deduction phases out once taxable income crosses the 2026 threshold and is gone above the upper limit. This calculator follows the 2026 Form 8995 instructions for tax year 2026. Everything runs in your browser and nothing is sent anywhere.

Qualified business income (QBI) for 2026
Taxable income before the QBI deduction
Filing status
Is this a specified service trade or business (SSTB)?
W-2 wages paid by the business (optional; for the wage limit above the threshold)
UBIA of qualified property (optional)
Qualified REIT dividends + PTP income (optional)
Net capital gain + qualified dividends (optional; lowers the taxable-income cap)

How the math works

below the threshold:
  deduction = the smaller of (20% × QBI + 20% × REIT/PTP) and (20% × (taxable income − net capital gain))

in the phase-in range (SSTB):
  applicable %     = 1 − (taxable income − threshold) / (upper − threshold)
  effective QBI    = QBI × applicable %
  tentative        = 20% × effective QBI
  wage limit       = greater of (50% × W-2 wages × applicable %,
                                25% × W-2 wages × applicable % + 2.5% × UBIA × applicable %)
  reduction        = phase-in % × max(0, tentative − wage limit)
  QBI component    = tentative − reduction
  deduction        = the smaller of (QBI component + 20% × REIT/PTP) and the taxable-income cap

at or above the upper limit:
  SSTB             → QBI component = $0
  non-SSTB         → QBI component = the smaller of (20% × QBI) and the wage limit

2026 thresholds (taxable income before the QBI deduction), from the draft 2026 Form 8995 instructions:

Filing status Threshold Upper limit (end of phase-in)
Single, head of household, qualifying surviving spouse $201,750 $276,750
Married filing jointly $403,500 $553,500
Married filing separately $201,775 $276,775

Example with the default inputs: $80,000 of QBI and $70,000 of taxable income, single, SSTB. You are below the $201,750 threshold, so Form 8995 applies. 20% of QBI is $16,000; 20% of taxable income is $14,000; the deduction is the smaller one, $14,000.

The rules this follows

  • What counts as QBI. Net income from a US trade or business that is not a C corporation — typically Schedule C profit after the deductible half of self-employment tax and similar adjustments, or your share from a partnership or S corporation (Schedule K-1). W-2 wages you earn as an employee are never QBI. Guaranteed payments for services and reasonable compensation paid to you by an S corporation are also out.
  • SSTB. A specified service trade or business includes health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage, investing and investment management, trading, dealing in securities, and any trade or business where the principal asset is the reputation or skill of one or more employees or owners. Most freelancers check Yes. Below the threshold an SSTB is treated like any other business; above the upper limit it qualifies for none of the QBI deduction.
  • The wage / UBIA limit. Above the threshold, the QBI component cannot exceed the greater of (a) 50% of the W-2 wages the business paid, or (b) 25% of those W-2 wages plus 2.5% of the unadjusted basis immediately after acquisition (UBIA) of qualified property. A sole proprietor with no employees and little depreciable property often has a $0 wage limit, so the deduction from that business drops to $0 once income is high enough — even if it is not an SSTB.
  • The overall cap. The whole deduction (QBI component plus 20% of qualified REIT dividends and PTP income) cannot exceed 20% of your taxable income minus net capital gain (including qualified dividends).
  • What this leaves out. Multiple trades or businesses and aggregation (Schedule B), agricultural/horticultural cooperatives (Schedule D), the separately stated REIT/PTP loss carryforward rules, taxable-income interactions with the standard deduction or itemizing beyond the number you enter, and state conformity. Enter taxable income before the QBI deduction.

Sources: 2026 Instructions for Form 8995 (draft; thresholds $201,750 / $403,500), Form 8995, Form 8995-A, Schedule A (Form 8995-A), IRS Tax Topic 560 / About Form 8995, 26 CFR 1.199A-5 (SSTB). Figures and rules checked on October 27, 2026. This is general information, not tax advice.

FAQ

Does the QBI deduction lower my self-employment tax?

No. It is an income-tax deduction only. Self-employment tax is figured on Schedule SE from your profit before this deduction. Use the self-employment tax calculator for that part.

I’m a freelance consultant. Am I an SSTB?

Usually yes. Consulting is listed as a specified service, and so are many other freelance fields (design and writing can fall under the reputation-or-skill category). Below the 2026 threshold that does not matter; above it, your deduction phases out.

What if I have no employees?

Below the threshold you still get the full 20% (subject to the taxable-income cap). Above the threshold the wage limit is often $0 without W-2 wages or UBIA, so the QBI component becomes $0 once you leave the phase-in range — and for an SSTB it is already $0 at the upper limit.

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