The QBI deduction (§199A)
Up to 20% of pass-through income, now permanent and with a $400 floor — and never for a C corporation.
The qualified business income deduction lets an owner of a pass-through business deduct up to 20% of its qualified business income, capped at 20% of taxable income less net capital gain. It is for "a taxpayer other than a corporation", so a C corporation never gets it. Above an inflation-indexed income threshold, wage and property limits and a rule for specified service businesses phase in; that part is the preparer's.
Where this lesson's rules come from
The sources behind this lesson's requirements, by kind. Anything marked as a convention is ours, not the rule-maker's.
- Federal statute
- 26 U.S.C. §199A(a), (i), as amended by Pub. L. 119-21 §70105 (opens in a new tab)The qualified business income deduction — 20%, made permanent, with a $400 minimumFree to read
The words this page teaches
Each links to its glossary definition, which also names the authority behind it and the components that render it.
- Qualified business income deductionA deduction for taxpayers other than corporations of up to 20% of qualified business income from pass-through businesses, limited above an income threshold. Made permanent by Pub. L. 119-21, which also added a $400 minimum for $1,000 or more of income from businesses the owner materially participates in
- Pass-through entityAn entity whose income is taxed to its owners instead of itself — a partnership, an S corporation, a disregarded entity. Each owner is taxed on their share of the income, which need not match the cash the entity pays out