Calculate your QBI deduction
Your QBI deduction
Income phase-out status
How it's calculated
| Net SE income (QBI) | $0 |
| × 20% base deduction | $0 |
| Taxable income (for limit test) | $0 |
| 20% taxable income limit | $0 |
| Phase-out reduction | $0 |
| Final QBI deduction | $0 |
What is the QBI deduction?
The Section 199A Qualified Business Income (QBI) deduction lets eligible self-employed people deduct up to 20% of their net business income from their taxable income. It was introduced by the Tax Cuts and Jobs Act and extended through at least 2028. For a freelancer earning $80,000, this deduction alone can save $3,500–5,000 in federal income tax.
The deduction is "above the line" in the sense that it reduces your taxable income before applying your tax bracket — but it doesn't reduce your SE tax base, only your income tax.
SSTB vs non-SSTB businesses
The QBI deduction has a critical limitation: if your business is a Specified Service Trade or Business (SSTB) and your income exceeds the threshold, your deduction phases out completely. SSTBs include consulting, law, accounting, financial services, health, performing arts, and athletics.
Most gig workers — rideshare drivers, delivery workers, freelance developers, designers, writers, tradespeople — are not SSTBs and get the full deduction below the threshold.
The income thresholds (2025)
For non-SSTB businesses: the full 20% deduction applies at any income level, subject only to a taxable income cap (the deduction can't exceed 20% of your taxable income after the standard deduction).
For SSTB businesses: the deduction phases out between $197,300 and $247,300 (single) or $394,600 and $494,600 (married filing jointly) in 2025. Above the upper limit, SSTB owners get no deduction.
How to maximize it
If you're near or above the phase-out threshold, two strategies can help: maximizing retirement contributions (SEP-IRA or Solo 401k) reduces your taxable income and keeps you in the deduction range, and increasing business deductions reduces your QBI which also reduces SE tax. Use our SEP-IRA Calculator and Solo 401(k) Calculator to see how retirement contributions interact with the QBI deduction.