The Section 199A qualified business income (QBI) deduction allows eligible self-employed individuals and pass-through business owners to deduct up to what percentage of qualified business income?

Section 199A, introduced by the Tax Cuts and Jobs Act of 2017, allows owners of sole proprietorships, partnerships, S-corporations, and certain trusts to deduct up to 20% of their qualified business income. For 2025, the deduction phases out for specified service trade or business (SSTB) owners with taxable income above $197,300 (single) and $394,600 (married filing jointly). The deduction cannot exceed the greater of 50% of W-2 wages paid by the business or 25% of W-2 wages plus 2.5% of unadjusted basis of qualified property.