Tax

Qualified business income

Qualified business income is the ordinary income from a qualified trade or business, calculated for the QBI deduction. It generally excludes wages, investment income and certain service business income above the income threshold.

Reviewed November 3, 2026

Why it matters

The QBI deduction can reduce the tax on business income for a sole proprietor, partner or S corporation shareholder. The calculation depends on the entity, the owner's taxable income and the type of business.

Example

A sole proprietor reports $80,000 of Schedule C profit. The preparer calculates the QBI deduction using the business income, the owner's taxable income and the applicable limitations.

Related terms

All checklists

Sources

Checked November 3, 2026. Public pages and tax rules change; confirm them before relying on them.

Ready to stop chasing?

Start free trial