{
  "id": "qbi-deduction",
  "version": "45ae2be3d82a",
  "status": "published",
  "name": "QBI Deduction Calculator",
  "question": "What is my QBI deduction?",
  "summary": "Works out the 2026 qualified business income (QBI) deduction on Form 8995: 20% of QBI and of REIT and PTP income, limited to 20% of taxable income less net capital gain, with the new $400 minimum.",
  "category": "finance",
  "subcategory": "tax-and-pay",
  "url": "https://www.acalculator.org/finance/qbi-deduction-calculator",
  "markdown": "https://www.acalculator.org/finance/qbi-deduction-calculator.md",
  "kind": "function",
  "method": "Line 4 = QBI − QBI loss carryforward; QBI component = 20% × line 4 when above $0. Line 8 = REIT dividends and PTP income − their loss carryforward; REIT component = 20% × line 8 when above $0. Income limit = 20% × (taxable income before the deduction − net capital gain), not below $0. Line 15 = the smaller of the two components added and the income limit. 2026: deduction = the greater of line 15 and $400 when QBI from businesses you materially participate in is at least $1,000. Only for taxable income at or below the 2026 threshold ($201,750; $403,500 joint; $201,775 married filing separately).",
  "assumptions": [
    "Tax year 2026 (IRS Rev. Proc. 2025-32), Form 8995 only: taxable income before the deduction at or below the threshold, and not a patron of an agricultural or horticultural cooperative.",
    "QBI is already net of the deductions that belong to the business (half of self-employment tax, self-employed health insurance and retirement contributions).",
    "The $400 minimum uses the QBI from businesses you materially participate in; with that box empty it uses the whole QBI on line 2, before last year’s loss carryforward.",
    "An estimate, not tax advice."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "status": {
        "title": "Filing status",
        "description": "Your 2026 federal filing status; it sets the Form 8995 income threshold.",
        "type": "string",
        "enum": [
          "single",
          "mfj",
          "mfs",
          "hoh",
          "qss"
        ]
      },
      "qbi": {
        "title": "Qualified business income",
        "description": "Net QBI or loss of all your businesses this year (Form 8995 line 2): profit less the deductions that belong to it.",
        "type": "number",
        "x-unit": "USD",
        "minimum": -1000000000000,
        "maximum": 1000000000000
      },
      "ti": {
        "title": "Taxable income before the QBI deduction",
        "description": "Your 2026 taxable income figured without the QBI deduction (Form 8995 line 11).",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "gains": {
        "title": "Net capital gain and qualified dividends (optional)",
        "description": "Net capital gain plus qualified dividends (Form 8995 line 12); they are taken out of the income limit.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "qbiloss": {
        "title": "QBI loss carried forward from 2025 (optional)",
        "description": "Last year’s qualified business loss carryforward (Form 8995 line 3), typed as a positive amount.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "reit": {
        "title": "REIT dividends and PTP income (optional)",
        "description": "Qualified REIT dividends and qualified publicly traded partnership income or loss (Form 8995 line 6).",
        "type": "number",
        "x-unit": "USD",
        "minimum": -1000000000000,
        "maximum": 1000000000000
      },
      "reitloss": {
        "title": "REIT and PTP loss carried forward from 2025 (optional)",
        "description": "Last year’s qualified REIT dividends and PTP loss carryforward (Form 8995 line 7), typed as a positive amount.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 1000000000000
      },
      "active": {
        "title": "QBI from businesses you materially participate in (optional)",
        "description": "For the $400 minimum: QBI from businesses you materially participate in. Empty means all of your QBI.",
        "type": "number",
        "x-unit": "USD",
        "minimum": -1000000000000,
        "maximum": 1000000000000
      }
    }
  },
  "outputs": {
    "deduction": {
      "label": "QBI deduction",
      "description": "The greater of the Form 8995 deduction and the $400 minimum when it applies.",
      "format": "money"
    },
    "component": {
      "label": "QBI component",
      "description": "20% of (QBI − last year’s QBI loss carryforward), or $0 when that is not more than $0 (lines 4 and 5).",
      "format": "money"
    },
    "reitComponent": {
      "label": "REIT and PTP component",
      "description": "20% of (REIT dividends and PTP income − last year’s loss carryforward), or $0 (lines 8 and 9).",
      "format": "money"
    },
    "incomeLimit": {
      "label": "Income limit",
      "description": "20% of (taxable income before the deduction − net capital gain), not below $0 (lines 13 and 14).",
      "format": "money"
    },
    "beforeMinimum": {
      "label": "Deduction before the minimum",
      "description": "The smaller of the two components added and the income limit (line 15).",
      "format": "money"
    },
    "minimum": {
      "label": "2026 minimum deduction",
      "description": "$400 when your QBI from businesses you materially participate in is at least $1,000; otherwise $0.",
      "format": "money"
    },
    "taxableAfter": {
      "label": "Taxable income after the deduction",
      "description": "Taxable income before the deduction − the QBI deduction, not below $0.",
      "format": "money"
    },
    "qbiCarry": {
      "label": "QBI loss to carry to 2027",
      "description": "QBI − last year’s QBI loss carryforward when below $0 (line 16), else $0.",
      "format": "money"
    },
    "reitCarry": {
      "label": "REIT and PTP loss to carry to 2027",
      "description": "REIT dividends and PTP income − last year’s loss carryforward when below $0 (line 17), else $0.",
      "format": "money"
    },
    "threshold": {
      "label": "2026 Form 8995 threshold",
      "description": "The most taxable income (before the deduction) that can use Form 8995 for your filing status.",
      "format": "money"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "status": "single",
      "qbi": 60000,
      "ti": 80000
    },
    "outputs": {
      "deduction": 12000,
      "component": 12000,
      "reitComponent": 0,
      "incomeLimit": 16000,
      "beforeMinimum": 12000,
      "minimum": 400,
      "taxableAfter": 68000,
      "qbiCarry": 0,
      "reitCarry": 0,
      "threshold": 201750
    },
    "text": "With $60,000.00 of QBI and $80,000.00 of taxable income, the 2026 QBI deduction is $12,000.00."
  },
  "examples": [
    {
      "given": {
        "status": "single",
        "qbi": 60000,
        "ti": 80000
      },
      "expect": {
        "component": 12000,
        "incomeLimit": 16000,
        "beforeMinimum": 12000,
        "minimum": 400,
        "deduction": 12000,
        "taxableAfter": 68000
      },
      "source": "IRS Instructions for Form 8995 (2025): lines 1 to 17, https://www.irs.gov/instructions/i8995; IRC 199A(a), (b)(1) and (i), https://www.law.cornell.edu/uscode/text/26/199A; IRS Rev. Proc. 2025-32 (IRB 2025-45), section 4.26 (2026 threshold $201,750; $403,500 joint; $201,775 married filing separately) and section 2.12 ($400 minimum, $1,000 of QBI), https://www.irs.gov/irb/2025-45_IRB; hand calculation in content.mdx; Python 3 check in docs/progress/WP-128/xcheck.py"
    },
    {
      "given": {
        "status": "mfj",
        "qbi": 150000,
        "ti": 120000,
        "gains": 20000
      },
      "expect": {
        "component": 30000,
        "incomeLimit": 20000,
        "deduction": 20000,
        "taxableAfter": 100000,
        "threshold": 403500
      },
      "source": "IRS Instructions for Form 8995 (2025): lines 1 to 17, https://www.irs.gov/instructions/i8995; IRC 199A(a), (b)(1) and (i), https://www.law.cornell.edu/uscode/text/26/199A (line 15 is the smaller of lines 10 and 14); IRS Rev. Proc. 2025-32 (IRB 2025-45), section 4.26 (2026 threshold $201,750; $403,500 joint; $201,775 married filing separately) and section 2.12 ($400 minimum, $1,000 of QBI), https://www.irs.gov/irb/2025-45_IRB; hand calculation in content.mdx; Python 3 check in docs/progress/WP-128/xcheck.py"
    },
    {
      "given": {
        "status": "single",
        "qbi": 1500,
        "ti": 50000
      },
      "expect": {
        "component": 300,
        "beforeMinimum": 300,
        "minimum": 400,
        "deduction": 400,
        "taxableAfter": 49600
      },
      "source": "IRC 199A(i) (the greater of the deduction and $400 for at least $1,000 of active QBI); IRS Rev. Proc. 2025-32 (IRB 2025-45), section 4.26 (2026 threshold $201,750; $403,500 joint; $201,775 married filing separately) and section 2.12 ($400 minimum, $1,000 of QBI), https://www.irs.gov/irb/2025-45_IRB; Python 3 check in docs/progress/WP-128/xcheck.py"
    },
    {
      "given": {
        "status": "hoh",
        "qbi": 30000,
        "qbiloss": 10000,
        "reit": 5000,
        "ti": 90000
      },
      "expect": {
        "component": 4000,
        "reitComponent": 1000,
        "deduction": 5000,
        "qbiCarry": 0,
        "reitCarry": 0
      },
      "source": "IRS Instructions for Form 8995 (2025): lines 1 to 17, https://www.irs.gov/instructions/i8995; IRC 199A(a), (b)(1) and (i), https://www.law.cornell.edu/uscode/text/26/199A (lines 3, 4, 6 to 10); hand calculation in content.mdx; Python 3 check in docs/progress/WP-128/xcheck.py"
    },
    {
      "given": {
        "status": "single",
        "qbi": -8000,
        "reit": 2000,
        "ti": 40000
      },
      "expect": {
        "component": 0,
        "reitComponent": 400,
        "minimum": 0,
        "deduction": 400,
        "qbiCarry": -8000
      },
      "source": "IRS Instructions for Form 8995 (2025): lines 1 to 17, https://www.irs.gov/instructions/i8995; IRC 199A(a), (b)(1) and (i), https://www.law.cornell.edu/uscode/text/26/199A (line 16 carries the loss forward); Python 3 check in docs/progress/WP-128/xcheck.py"
    }
  ],
  "sources": [
    "IRS, Rev. Proc. 2025-32 (Internal Revenue Bulletin 2025-45): section 4.26, 2026 threshold amounts under § 199A(e)(2) ($403,500 joint, $201,775 married filing separately, $201,750 all other returns) and phase-in range amounts; section 2.12, the $400 minimum deduction and $1,000 of qualified business income, adjusted for inflation after 2026. https://www.irs.gov/irb/2025-45_IRB (retrieved 2026-10-18)",
    "IRS, Instructions for Form 8995 (2025), Qualified Business Income Deduction Simplified Computation: who can use the form, lines 1 to 17, loss carryforwards. https://www.irs.gov/instructions/i8995 (retrieved 2026-10-18)",
    "26 U.S.C. § 199A, Qualified business income (Legal Information Institute), subsections (a), (b)(1), (c)(2), (e)(2) and (i) as amended by P.L. 119-21. https://www.law.cornell.edu/uscode/text/26/199A (retrieved 2026-10-18)",
    "IRS, Draft tax forms: Form 8995 (2026, posted 05/29/2026) and Instructions for Form 8995 (2026, posted 09/10/2026), both drafts. https://www.irs.gov/draft-tax-forms (retrieved 2026-10-18)"
  ],
  "related": [
    "self-employment-tax",
    "income-tax",
    "estimated-tax",
    "tax-bracket"
  ],
  "changelog": []
}