OBBB Permanently Extends, Enhances Section 199A QBI Deduction

The 2017 TCJA created a new 20% deduction for qualified business income (QBI). This QBI deduction for pass-through entities was set to expire after 2025, along with many of the 2017 provisions. The 2025 OBBB made the 20% 199A deduction permanent. However, the 20% QBI deduction has always been subject to limitations (and those limitations will continue to apply). These limitations generally do not apply to taxpayers whose earnings do not exceed an inflation-adjusted income threshold. After the taxpayer's income exceeds the relevant threshold, they are subject to a phase-out of the QBI deduction in proportion of excess earnings above the threshold up to $50,000 ($100,000 for joint filers). Beginning in 2026, the OBBB increased the phase-out range above the income threshold for individuals so that they will now equal $75,000 (single filers) or $150,000 (joint returns). For more information on the QBI deduction and the OBBB's changes, visit Tax Facts Online. Read More: Link to Q8931. Note: Q8931, 8932, 806, 807 were updated.