If you are a sole-proprietor of a small business, you may be eligible for the Qualified Business Income Deduction on your individual income tax return. This 20% business income deduction was first introduced for the 2018 tax year.
In order to qualify for this 20% deduction on your 2022 tax return, your taxable income listed on your return must be less than:
- $340,100 if married filing jointly
OR
- $170,050 if filing as a single filing status (this includes married filing separately)
If your business earns more than the threshold, the deduction becomes 20% of your business income or 50% of total wages paid to employees – whichever is less.