The 20% pass-through deduction survived, permanently — with wider phase-in ranges and a new $400 minimum. Who qualifies, where the SSTB trap bites, and the levers that protect the deduction at high incomes.
Twenty percent of your business profit, deducted before tax is calculated, without spending a dollar — that's the qualified business income deduction, and the 2025 tax law made it permanent. It also widened the phaseout ranges and added a small-business minimum. If you run any pass-through — sole proprietorship, LLC, S corp, partnership — this is likely your single largest deduction, and also the easiest to accidentally shrink.
QBI = your share of qualified net business profit (not W-2 wages you pay yourself, not capital gains, not interest). The deduction is generally 20% of QBI, limited to 20% of your taxable income minus net capital gains. It's a personal deduction taken on your 1040 — the business's books never see it — and you get it on top of the standard deduction.
Specified service trades or businesses — health, law, accounting, consulting, financial services, athletics, performing arts, and any business whose asset is the owner's reputation — get zero QBI deduction once income clears the top of the range. A consultant couple with $600k of taxable income loses a deduction a contractor couple with identical income keeps. If you're an SSTB owner near the thresholds, income management (retirement plans, timing, charitable bunching) is worth real money: every dollar kept below the range can preserve 20 cents of deduction.
Above the thresholds, non-SSTB owners keep the deduction only up to the greater of 50% of W-2 wages paid, or 25% of wages plus 2.5% of qualifying property. This creates a genuine paradox for S corp owners: a lower salary saves payroll tax but can shrink the wage limit and cost QBI at high incomes. The optimal salary is a joint calculation — anyone who set theirs before the QBI era should re-run it.
Starting in 2026, an active business with at least $1,000 of QBI gets a minimum $400 deduction — trivial for established firms, a nice guarantee for side hustles and first-year businesses.
Permanence changes the posture: this is no longer a use-it-before-it-dies provision but a 20% structural discount to design your compensation and retirement strategy around. If nobody has modeled your QBI position since the law changed, that's a gap worth closing before December.
This guide is the hub — each of these covers one specific situation in detail:
Talk it through with a licensed US tax professional — we'll tell you honestly whether it applies to your situation.
Beyond the obvious laptop and software: the home office rules that aren't scary, the vehicle method most people pick wrong, the self-employed health insurance deduction, and the retirement moves that dwarf everything else.
Permanent QBI, permanent 21% corporate rate, bigger QSBS — the 2026 rules changed the entity math for good. A practical framework for choosing (or switching), with the real numbers.
Equity compensation creates the most expensive tax surprises we see — under-withheld RSUs, double-taxed ESPP shares, phantom AMT from ISOs. How each type is really taxed, and the moves that protect you.
