What is the qualified business income deduction?
Originally from Broadridge Content. Read the original article on the publisher’s site.
An individual taxpayer (and certain trusts and estates) can take an income tax deduction for up to 20% of the taxpayer's allocable share of domestic qualified business income (QBI) from a partnership, S corporation, or sole proprietorship. (The deduction may also be available for qualified REIT dividends, cooperative dividends, and publicly traded partnership income.) This deduction was made permanent by the One Big Beautiful Bill (OBBBA) of 2025. Qualified business income means the net amount of qualified items of income, gain, deduction, and loss effectively connected with the conduct of a qualified trade or business within the United States and included or allowed in determining taxable income. It does not include capital gains or losses, dividends, investment interest income, or reasonable compensation paid to the taxpayer by the business.
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