What this number is
The qualified business income deduction under section 199A can be 20% of a sole proprietor’s qualified business income. It is not 20% of Schedule C profit. Half of the self-employment tax comes off the base first. Health insurance and retirement contributions come off only when they are typed in. The result is a planning estimate for one Schedule C business below the taxable-income threshold. It is not a prepared return.
Specified-service status, W-2 wages, and the unadjusted basis of property do not change the result below the threshold, so this page does not ask about them. The moment taxable income is over the threshold, including through the phase-in band, the page stops and shows no number. A deduction can still exist above that line. This calculator will not compute the wage limit, the property limit, or an S corporation salary. The retirement ceilings that share this profit are on the solo 401(k) and SEP versus solo 401(k) pages.
Worked example
On $100,000 of Schedule C profit, with nothing else typed, the self-employment base is $92,350. Self-employment tax is $14,129.55, and half of it is $7,064.775. Qualified business income is profit minus that half, $92,935.225. Twenty percent is $18,587.045. The page rounds half up, so the deduction shows $18,587. The $400 floor does not change it, because the ordinary amount is already larger. Taxable income was left blank, so the line under the number says the threshold was not checked, and capital gain was ignored.
The same profit with $1,000 of health insurance and $18,587.045 of retirement contributions produces a base of $73,348.18 and a deduction of about $14,670. Those subtractions are optional. Leaving the fields blank does not invent them.
Why the formula
Below the threshold, one business produces 20% of qualified business income. Treasury Regulation § 1.199A-3(b)(1)(vi) reduces that income by half of self-employment tax, by self-employed health insurance, and by qualified retirement contributions, allocated across businesses by gross income. This page assumes the Schedule C shown is the only business. Health insurance and retirement contributions are subtracted only when typed.
With taxable income filled in, and not over the threshold, the ordinary amount is the lesser of 20% of the base and 20% of taxable income minus net capital gain. Gain typed without taxable income is ignored, so the $100,000 example stays $18,587. The same profit, single, with taxable income of $100,000 and net capital gain of $50,000, shows $10,000.
Section 199A(i) gives an applicable taxpayer the greater of the ordinary amount and $400. Applicable here means qualified business income of at least $1,000 and material participation. This page assumes material participation in this Schedule C and uses this business alone for the $1,000 test. The $400 can exceed the taxable-income cap. On $5,000 of profit, single, with taxable income of $100, the ordinary amount is $20 and the deduction shows $400. On $1,500 of profit the deduction shows $400. On $1,000 of profit the base is under $1,000, so the deduction stays about $186. Both dollar amounts stay unadjusted for tax years beginning in 2026. A loss shows $0. Loss carryovers, REIT dividends, and publicly traded partnership income are not modeled.
Common mistakes
- Taking 20% of Schedule C profit. On $100,000, half of self-employment tax, about $7,065, comes off first.
- Using one threshold for every status. Married filing jointly stops above $403,500. Married filing separately stops above $201,775, which is $25 higher than the single and head-of-household line of $201,750. Income equal to the line still produces an estimate. One cent over it stops.
- Reading a stop as a deduction of zero. Wages and property can change the answer above the line. A qualifying surviving spouse is not in the list, and this page does not guess that row.
The half of self-employment tax uses the $184,500 wage base and assumes W-2 Social Security wages are zero. Additional Medicare tax of 0.9% is not part of that half. A W-2 job can change the base.
Questions and answers
Is the QBI deduction 20% of Schedule C profit?
Half of self-employment tax comes off first. On $100,000 of Schedule C profit that reduction is about $7,065, and 20% of what remains is about $18,587.
What happens above the income threshold?
This version stops and shows no number. For 2026 the line is $201,750 for single and head of household, $201,775 for married filing separately, and $403,500 for married filing jointly. Stopping is a boundary of this calculator. A deduction can still exist above the line.
When does the $400 minimum apply?
When qualified business income from this Schedule C is at least $1,000, the deduction is at least $400. On $1,500 of profit the ordinary 20% is under $400, so the page shows $400. On $1,000 of profit the base is under $1,000, so the floor does not apply.
Do I have to enter taxable income?
Leave it blank and the page still shows 20% of the qualified-business-income base, with the line “Threshold not checked.” Capital gains are ignored until taxable income is entered. Over the threshold, the dollar amount is removed.
Other tools
Retirement contributions typed here reduce this base. The ceilings themselves are computed on the solo 401(k) calculator and the SEP versus solo 401(k) calculator. About names who is writing and states that this site does not prepare a return.
Sources
Checked 2026-11-04. Revenue Procedure 2025-32, section 4.26, for the 2026 thresholds, and section 2.12 for the $400 minimum and the $1,000 eligibility amount. Section 199A, including subsection (i), for the shape of the deduction and the floor. Treasury Regulation § 1.199A-3(b)(1)(vi) for the three reductions to qualified business income. Publication 560 and the SSA 2026 fact sheet for the self-employment tax that produces the half taken off the base. Planning estimate, not tax advice. No signup, no brokerage funnel.