QBI deduction calculator
The qualified business income deduction knocks up to 20% off the taxable share of your freelance profit, and plenty of freelancers claim it wrong or not at all. Below the income threshold the math is clean; this runs it and tells you when you have outgrown it.
What the ledger says
QBI deduction$16,000
- 20% of QBI
- $16,000
- Income limit (20% of ordinary income)
- $19,000
Estimate, not advice
The formula
Deduction = the lesser of 20% × QBI and 20% × (taxable income − net capital gains). Below the threshold that is the whole computation; above it, wage/property limits and the SSTB rules take over.
What this ignores
Above-threshold mechanics (W-2 wage limit, UBIA, SSTB phase-out), multiple businesses and aggregation, REIT/PTP income, and filing statuses other than single. Sources: IRC §199A; IRS Rev. Proc. 2024-40 for the 2025 threshold.
Uses 2025 IRS constants (standard deduction $15,000; Social Security wage base $176,100).
Field notes
- Do I qualify for QBI as a freelancer?
- Almost certainly yes: sole proprietors, LLCs, and S-corp owners with pass-through business income all qualify below the threshold. It is not an obscure loophole; it is a line on Form 8995 that tax software fills if you let it.
- Does QBI reduce self-employment tax?
- No. Like retirement contributions, it reduces income tax only. SE tax is computed on profit before this deduction, which is why the quarterly calculator and this one are separate tools.
- What is an SSTB and why does it matter?
- A specified service trade or business: consulting, law, accounting, health, financial services, athletics, performing arts. Below the threshold it changes nothing. Above it, SSTB deductions phase out to zero, which is exactly when S-corp salary planning and a CPA start paying for themselves.