Qualified Business Income (QBI) Deduction
A deduction of up to 20% of qualifying pass-through business income for eligible self-employed people and owners.
The QBI deduction (Section 199A) lets many owners of pass-through businesses — sole proprietors, partnerships, S-corporations, and some LLCs — deduct up to 20% of their qualified business income, lowering the effective tax rate on that income.
Eligibility and the full benefit phase out above income thresholds, and certain service businesses face additional limits at higher incomes. The rules are intricate, but for self-employed people and small-business owners the deduction can be substantial, which is why business income needs to be modeled with QBI in mind rather than taxed like a wage.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.