--- title: "Qualified business income deduction: Definition and Sources | Tax Glossary" description: "The qualified business income (QBI) deduction lets many owners of pass-through businesses deduct up to 20 percent of qualified business income." url: https://wallacecpa.multisites.ai/glossary/qualified-business-income-deduction publisher: Wallace CPA phone: +1-877-682-1171 quote: https://wallacecpa.multisites.ai/contact --- Federal tax # Qualified business income deduction The qualified business income (QBI) deduction lets many owners of pass-through businesses deduct up to 20 percent of qualified business income. The QBI deduction, also called Section 199A, is for owners whose business income flows to a personal return. The IRS lists sole proprietorships, partnerships, S corporations and some trusts and estates. An owner of an [S corporation](https://wallacecpa.multisites.ai/glossary/s-corporation) often claims it. Income earned through a C corporation or as an employee does not qualify. Wages and property limits can reduce the deduction at higher income. The IRS says the deduction is up to 20 percent of QBI, with rules that changed for tax years after 2025, so check the current form. A lower salary can raise QBI, but the pay must still be [reasonable](https://wallacecpa.multisites.ai/glossary/reasonable-compensation). The [tax planning page](https://wallacecpa.multisites.ai/services/tax-planning) covers this. [Wallace CPA can helpTax planning](https://wallacecpa.multisites.ai/services/tax-planning) ## Related terms - [S corporation](https://wallacecpa.multisites.ai/glossary/s-corporation) - [Reasonable compensation](https://wallacecpa.multisites.ai/glossary/reasonable-compensation) - [Self-employment tax](https://wallacecpa.multisites.ai/glossary/self-employment-tax) - [Section 179 deduction](https://wallacecpa.multisites.ai/glossary/section-179-deduction) ## Sources 1. [IRS: Qualified business income deduction](https://www.irs.gov/newsroom/qualified-business-income-deduction) ## Talk to Wallace CPA Call the Southlake office and say what you need: a return, an IRS letter, your books or a new business. Have the notice or last year's return nearby if you have one. [Call (877) 682-1171](tel:+1-877-682-1171)[Send a message](https://wallacecpa.multisites.ai/contact) 180 State Street, Suite 225, Southlake, TX 76092