If you’re self-employed or running a small business, there’s fresh tax relief on the horizon. The Section 199A Qualified Business Income (QBI) deduction—originally set to expire in 2025—has been made permanent under the One Big Beautiful Bill Act (OBBBA). Even better, starting in 2026, the rules improve in favor of business owners.

What the QBI Deduction Means for You

The QBI deduction lets qualifying owners of pass-through businesses deduct up to 20% of their qualified business income from taxable income. Eligible entities include:

• Sole proprietorships

• Partnerships

• LLCs (in most cases)

• S Corporations

QBI usually means your net business income but does not include items like capital gains, dividends, interest income, owner wages, or guaranteed payments. And—you don’t need to itemize deductions to take advantage of it.

How Income Limits Apply

The deduction isn’t unlimited—it phases out based on your income level and the type of business you run:

• Specified service trades or businesses (SSTBs)—such as law, medicine, consulting, financial planning, and accounting—lose part or all of the deduction once income crosses certain thresholds ($197,300 single / $394,600 joint in 2025).

• Non-SSTBs face limits tied to wages paid to employees or the cost of certain property.

These rules can get technical, so it’s best to map out your eligibility with an advisor before tax season.

Changes Starting in 2026

OBBBA didn’t just make the deduction permanent—it made it stronger. Here’s what’s changing:

• Higher income phase-out ranges — the “window” before limits kick in expands by $25,000 for single filers and $50,000 for joint filers.

• A guaranteed minimum deduction — anyone earning at least $1,000 of QBI with material participation will now qualify for at least a $400 deduction.

That means more business owners can qualify and some will see bigger deductions moving forward.

Final Takeaway

The QBI deduction can be one of the most valuable tools for lowering taxable income as a small business owner. With the rules now locked in and improvements coming in 2026, it’s a perfect time to revisit your tax planning strategy.