What is Qualified business income (QBI) deduction?
In short
The qualified business income (QBI) deduction under Section 199A lets eligible individuals deduct up to 20% of qualified business income from sole proprietorships, partnerships and S corporations. The One Big Beautiful Bill Act made it permanent.
Key takeaways
- It is taken after adjusted gross income, and taxpayers who itemize and those who don't can both claim it.
- Above income thresholds, wage and property limits apply, and specified service businesses lose the deduction.
- Wages paid to an S corporation owner and guaranteed payments to partners aren't qualified business income.
Where it's tested
REG: Individual Taxation: Adjustments & Deductions — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Under the One Big Beautiful Bill Act, what is the state and local tax (SALT) deduction cap, and is it permanent?