The Qualified Business Income Deduction (QBID) allows eligible business owners to deduct up to 20% of their qualified business income. The income thresholds used to determine whether additional limitations apply are adjusted annually for inflation.
For tax year 2026 (returns filed in 2027), the thresholds are:
- Married Filing Jointly: $403,500
- All Other Filing Statuses: $201,750
For comparison, the thresholds in prior years were:
| Tax Year | Married Filing Jointly | All Other Filing Statuses |
|---|---|---|
| 2026 | $403,500 | $201,750 |
| 2025 | $394,600 | $197,300 |
| 2024 | $383,900 | $191,950 |
| 2023 | $364,200 | $182,100 |
| 2022 | $340,100 | $170,050 |
| 2021 | $329,800 | $164,900* |
*For 2021, the Married Filing Separately threshold was $164,925.
What Form Do I Use?
The form used to calculate your QBI deduction depends on your taxable income and whether you received a Form 1099-PATR.
Form 8995
You will generally use Form 8995, Qualified Business Income Deduction Simplified Computation, if:
- Your taxable income is at or below the applicable threshold for your filing status, and
- You are not required to use the more complex calculation rules.
Form 8995-A
You will generally use Form 8995-A, Qualified Business Income Deduction, if:
- Your taxable income exceeds the applicable threshold, or
- You received a Form 1099-PATR, or
- Your QBI deduction is subject to wage, qualified property, or specified service trade or business (SSTB) limitations.
Why the Threshold Matters
If your taxable income is below the threshold, calculating the deduction is usually straightforward. Once your income exceeds the threshold, additional limitations may apply based on:
- Wages paid to employees
- Qualified business property
- Whether your business is a Specified Service Trade or Business (SSTB)
The program automatically determines which form to use and calculates the allowable deduction based on the information entered on your return.
Additional Information
Please review this Knowledgebase article about claiming the Qualified Business Income Deduction (QBID) here.