# What is my QBI deduction?

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.

- Page: https://www.acalculator.org/finance/qbi-deduction-calculator
- JSON spec: https://www.acalculator.org/finance/qbi-deduction-calculator.json
- Version: 45ae2be3d82a

## Default answer

Example with the default inputs (Filing status Single, Qualified business income $60,000.00, Taxable income before the QBI deduction $80,000.00): With $60,000.00 of QBI and $80,000.00 of taxable income, the 2026 QBI deduction is $12,000.00.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| status | Filing status | Your 2026 federal filing status; it sets the Form 8995 income threshold. |
| qbi | Qualified business income | Net QBI or loss of all your businesses this year (Form 8995 line 2): profit less the deductions that belong to it. |
| ti | Taxable income before the QBI deduction | Your 2026 taxable income figured without the QBI deduction (Form 8995 line 11). |
| gains | Net capital gain and qualified dividends (optional) | Net capital gain plus qualified dividends (Form 8995 line 12); they are taken out of the income limit. |
| qbiloss | QBI loss carried forward from 2025 (optional) | Last year’s qualified business loss carryforward (Form 8995 line 3), typed as a positive amount. |
| reit | REIT dividends and PTP income (optional) | Qualified REIT dividends and qualified publicly traded partnership income or loss (Form 8995 line 6). |
| reitloss | REIT and PTP loss carried forward from 2025 (optional) | Last year’s qualified REIT dividends and PTP loss carryforward (Form 8995 line 7), typed as a positive amount. |
| active | QBI from businesses you materially participate in (optional) | For the $400 minimum: QBI from businesses you materially participate in. Empty means all of your QBI. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| deduction | QBI deduction | The greater of the Form 8995 deduction and the $400 minimum when it applies. |
| component | QBI component | 20% of (QBI − last year’s QBI loss carryforward), or $0 when that is not more than $0 (lines 4 and 5). |
| reitComponent | REIT and PTP component | 20% of (REIT dividends and PTP income − last year’s loss carryforward), or $0 (lines 8 and 9). |
| incomeLimit | Income limit | 20% of (taxable income before the deduction − net capital gain), not below $0 (lines 13 and 14). |
| beforeMinimum | Deduction before the minimum | The smaller of the two components added and the income limit (line 15). |
| minimum | 2026 minimum deduction | $400 when your QBI from businesses you materially participate in is at least $1,000; otherwise $0. |
| taxableAfter | Taxable income after the deduction | Taxable income before the deduction − the QBI deduction, not below $0. |
| qbiCarry | QBI loss to carry to 2027 | QBI − last year’s QBI loss carryforward when below $0 (line 16), else $0. |
| reitCarry | REIT and PTP loss to carry to 2027 | REIT dividends and PTP income − last year’s loss carryforward when below $0 (line 17), else $0. |
| threshold | 2026 Form 8995 threshold | The most taxable income (before the deduction) that can use Form 8995 for your filing status. |

## 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.

## Worked examples

1. status = single, qbi = $60,000.00, ti = $80,000.00 gives component = $12,000.00, incomeLimit = $16,000.00, beforeMinimum = $12,000.00, minimum = $400.00, deduction = $12,000.00, taxableAfter = $68,000.00. 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.
2. status = mfj, qbi = $150,000.00, ti = $120,000.00, gains = $20,000.00 gives component = $30,000.00, incomeLimit = $20,000.00, deduction = $20,000.00, taxableAfter = $100,000.00, threshold = $403,500.00. 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.
3. status = single, qbi = $1,500.00, ti = $50,000.00 gives component = $300.00, beforeMinimum = $300.00, minimum = $400.00, deduction = $400.00, taxableAfter = $49,600.00. 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.
4. status = hoh, qbi = $30,000.00, qbiloss = $10,000.00, reit = $5,000.00, ti = $90,000.00 gives component = $4,000.00, reitComponent = $1,000.00, deduction = $5,000.00, qbiCarry = $0.00, reitCarry = $0.00. 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).
5. status = single, qbi = -$8,000.00, reit = $2,000.00, ti = $40,000.00 gives component = $0.00, reitComponent = $400.00, minimum = $0.00, deduction = $400.00, qbiCarry = -$8,000.00. 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).

## FAQ

### How do you calculate the QBI deduction?

On Form 8995 it is 20% of your qualified business income plus 20% of qualified REIT dividends and PTP income, but no more than 20% of taxable income (before the deduction) minus net capital gain. With $60,000 of QBI and $80,000 of taxable income: 20% × 60,000 = $12,000, under the $16,000 limit, so the deduction is $12,000.

### Who can use Form 8995 for 2026?

Anyone with QBI whose 2026 taxable income before the QBI deduction is at or below $201,750, or $403,500 married filing jointly and $201,775 married filing separately (IRS Rev. Proc. 2025-32). Above that, use Form 8995-A, where wage, property and service business limits phase in. Patrons of agricultural or horticultural cooperatives also use Form 8995-A.

### What is the new $400 minimum deduction?

From 2026, if you have at least $1,000 of QBI from businesses you materially participate in, your QBI deduction is at least $400 (IRC 199A(i), added by P.L. 119-21). Passive income does not count toward the $1,000. Both amounts rise with inflation after 2026.

### What counts as qualified business income?

The net profit of a business you own directly or through a partnership or S corporation, less the deductions that belong to it, such as half of self-employment tax, self-employed health insurance and retirement plan contributions. It does not include wages you earn as an employee, capital gains and losses, most interest and dividends, or reasonable pay and guaranteed payments the business pays you.

### Why does capital gain lower the limit?

The law limits the deduction to 20% of taxable income minus net capital gain, so gains taxed at the capital gains rates do not support the deduction. Qualified dividends count as gain here. With $120,000 of taxable income and $20,000 of gains, the limit is 20% × 100,000 = $20,000.

### What happens to a business loss?

If your QBI after last year’s carryforward is below zero, the QBI component is $0 and the loss carries forward to the next year (Form 8995 line 16), where it lowers that year’s QBI. A REIT or PTP loss carries forward on its own line (line 17).

### Does the QBI deduction lower my self-employment tax?

No. It comes off after adjusted gross income, on Form 1040 line 13a, so it lowers taxable income but not adjusted gross income or self-employment tax.

## 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)