QBI Deduction Planning (US)

Answer (2026): The QBI deduction can be worth up to 20% of qualified business income, but it is not automatic. The clean path is to confirm eligibility, income thresholds for your tax year, and wage/property limits using the current IRS instructions. (https://www.irs.gov/forms-pubs/about-form-8995)

Context: Best for owners of S-corps, partnerships, or sole proprietorships with variable income or multiple entities.

Action: Use this checklist to assess eligibility, then review the current Form 8995 or 8995-A instructions with your CPA.

Last reviewed: January 21, 2026.

Key takeaways

• QBI is a deduction with limits, not a blanket benefit.
• Specified service businesses face extra restrictions once income crosses thresholds.
• Wage and property limits can materially change the deduction.

If income crossed a threshold this year, assume the deduction changed and verify it.

The 5-step eligibility check

1. Confirm the entity type. QBI is for pass-through income (S-corps, partnerships, sole proprietorships). (https://www.irs.gov/forms-pubs/about-form-8995)

2. Check the business category. Certain specified service trades or businesses face extra limits once income crosses thresholds. (https://www.irs.gov/instructions/i8995)

3. Review income thresholds for your tax year. The IRS updates thresholds annually in the Form 8995 and 8995-A instructions. (https://www.irs.gov/instructions/i8995, https://www.irs.gov/instructions/i8995a)

4. Assess wage and property factors. W-2 wages and qualified property can affect the deduction at higher income levels. (https://www.irs.gov/instructions/i8995)

5. Coordinate entity and compensation decisions. Salary levels, distributions, and entity structure can change the final outcome. (https://www.irs.gov/instructions/i8995)

Decision checklist

• Does the business qualify as a pass-through entity for QBI?
• Are we near income thresholds that change the calculation?
• Do wages and property levels support the deduction this year?
• Are any entities in specified service categories?
• Is compensation structured in a way that creates unintended trade-offs?

Example scenario

A founder with two businesses sees income rise above the threshold range. The review shows one entity is a specified service trade, so they coordinate wages and reporting to avoid a surprise reduction.

Questions to ask your CPA

• Which QBI form applies to our income level this year?
• Do any entities fall into specified service categories?
• How do W-2 wages and property values affect our deduction?
• Are there timing decisions that change QBI this year?

Related tools

• Year-End Tax Projection
• Tax Optimization

Related resources

• Year-End Tax Planning Guide
• Estimated Tax Catch-Up Guide
• S-corp Reasonable Compensation

Related pages

• Advisor
• Family Office Blueprint

Next step

Use the Year-End Tax Projection to confirm your income range, then review QBI eligibility with your CPA using the latest IRS instructions for your tax year.

Compliance note

This guide is for planning and coordination only. It does not provide tax or legal advice. Confirm eligibility and calculations with a qualified professional.

Sources

• IRS: Form 8995 (Qualified Business Income Deduction)
  https://www.irs.gov/forms-pubs/about-form-8995
• IRS: Instructions for Form 8995
  https://www.irs.gov/instructions/i8995
• IRS: Instructions for Form 8995-A
  https://www.irs.gov/instructions/i8995a