If you run a law firm, medical or dental practice, consulting shop, financial advising business, or any business whose main asset is your reputation or skill, your QBI deduction phases out above an income threshold. Enter your income to see how much of the 20% deduction survives.
Numbers are produced by the calculator\'s phase-out logic for 2025 (single threshold $197,300, $50,000 phase-out range).
| Scenario | QBI | Ordinary Income | QBI Deduction | Result |
|---|---|---|---|---|
| Solo consultant, $150k income | $150,000 | $150,000 | $30,000 | Full 20% |
| Solo consultant, $220k income | $220,000 | $220,000 | $24,024 | Partial (54.6%) |
| Solo consultant, $300k income | $300,000 | $300,000 | $0 | Fully phased out |
At $220,000, only 54.6% of the phase-out range remains, so the tentative $44,000 deduction is cut to $24,024. At $300,000 the owner is past the $247,300 ceiling and loses the deduction entirely.
Under IRC §199A, a specified service trade or business is any trade or business whose principal asset is the reputation or skill of one or more employees. The statute names: health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, and any business where the principal asset is the reputation or skill of employees - plus investing and investment management, trading, and dealing in securities.
Owners of an SSTB whose taxable income exceeds the threshold ($197,300 single / $394,600 MFJ in 2025) start losing the deduction, and lose it entirely $50,000 (single) or $100,000 (MFJ) above the threshold. Architects and engineers are specifically excluded from the SSTB definition by statute - a fact that surprises many.
Because the test uses taxable income, not business profit, retirement plan contributions, HSA contributions, and charitable deductions all lower taxable income and can pull an SSTB owner back under the phase-out. This is the single most common planning move for consultants near the threshold.
| Filing Status | Full Deduction Below | Fully Phased Out Above | Phase-Out Range |
|---|---|---|---|
| Single | $197,300 | $247,300 | $50,000 |
| Married Filing Jointly | $394,600 | $494,600 | $100,000 |
SSTB status only matters inside the phase-out band. Below the threshold, an SSTB gets the same 20% deduction as any other qualified business. Above the top of the band, the deduction is zero - and unlike non-SSTBs, there is no wage-cap alternative that can rescue it.
The people who search for this are typically solo professionals - a consultant billing $250,000, a dentist, an attorney - discovering at tax time that their "pass-through deduction" evaporated. The difference between an SSTB and a non-SSTB near the threshold can be worth $10,000-$40,000 of deduction, so classification (and income management) is a real planning decision.
⚠️ Important: This simplified calculator assumes taxable income equals QBI and omits the W-2 wage and UBIA limitation details, aggregation rules, the qualified-reit-dividend and PTP components, and the ordering of the standard deduction. It is a planning estimate only - see a tax advisor and IRS Form 8995-A instructions.