What Is the QBI Deduction?

The Qualified Business Income (QBI) deduction lets eligible small business owners deduct up to 20% of their qualified business income. It was created to support entrepreneurs, freelancers, and pass-through entities like sole proprietorships, partnerships, S corps, and some LLCs.

Who Qualifies

• You have pass-through business income (Schedule C, E, or K-1)
• Your business is not a C corporation
• Your taxable income is under the annual thresholds, or
• If over thresholds, the deduction may phase out depending on your business type and wages/assets

Key Limits (High Level)

• Income thresholds update annually
• Certain service businesses phase out faster
• W-2 wages and qualified property can increase the allowed deduction

Why It Matters

• Reduces taxable income
• Encourages investment and hiring
• Pairs with smart entity selection (LLC vs S corp)

How FileJoy Helps

• Estimates your QBI deduction as you enter income and expenses
• Flags potential phase-out risks
• Helps optimize owner wages for S corps

If you run a small business, QBI could be one of your biggest savings opportunities.