2019 QBI Deduction Threshold
For 2019, the QBI Deduction Threshold figures are $321,400 (Threshold, joint filers), $160,700 (Threshold, single filers), $421,400 (Phase-in range top, joint filers) and 8 more figures below.
| Item | Joint filers | Single filers | Married filing separately |
|---|---|---|---|
| Threshold | $321,400 | $160,700 | $160,725 |
| Phase-in range top | $421,400 | $210,700 | $210,725 |
Effective 2019-01-01Source: 2019 Instructions for Form 8995-A (IRS)Verified 2026-09-04
Compared with 2018
| Item | 2018 | 2019 | Change |
|---|---|---|---|
| Threshold, joint filers | $315,000 | $321,400 | +$6,400 (+2.0%) |
| Threshold, single filers | $157,500 | $160,700 | +$3,200 (+2.0%) |
| Phase-in range top, joint filers | $415,000 | $421,400 | +$6,400 (+1.5%) |
| Phase-in range top, single filers | $207,500 | $210,700 | +$3,200 (+1.5%) |
| Threshold, married filing separately | $157,500 | $160,725 | +$3,225 (+2.0%) |
| Phase-in range top, married filing separately | $207,500 | $210,725 | +$3,225 (+1.6%) |
| QBI component rate | 20% | 20% | +0% (+0.0%) |
| Taxable income limit rate | 20% | 20% | +0% (+0.0%) |
| W-2 wage limit rate | - | 50% | - |
| Alternative W-2 wage rate | - | 25% | - |
| Qualified property rate | - | 2.5% | - |
Threshold
Phase-in range top
$160,700$421,400
One dot per column of the table, on a scale running from the smallest of these amounts to the largest. The scale is logarithmic, so that the amounts crowded at the low end stay far enough apart to read. The table states which dot is which.
Who it applies to
Individuals, estates, and trusts that claim the qualified business income deduction under section 199A
What changed this year, and why
The qualified business income (QBI) deduction thresholds for tax year 2019 were set at $321,400 for joint filers and $160,700 for single filers. These figures determine whether income- or wage-based limitations apply to the deduction.
Common questions
- What does the QBI deduction threshold determine?
- The QBI deduction threshold is the taxable income level above which the deduction may be limited by factors such as wages paid by the business, the unadjusted basis of qualified property, and whether the business is a specified service trade or business. Below the threshold, these limitations generally do not apply.
- What is the phase-in range?
- Taxable income above the threshold but not exceeding the phase-in range top causes the limitations to be phased in gradually. Income above the phase-in range top means the full limitations apply.
- How did the 2019 thresholds compare to 2018?
- The 2018 threshold was $315,000 for joint filers and $157,500 for single filers. The 2018 phase-in range topped out at $415,000 for joint filers and $207,500 for single filers.
Above the threshold, the wage and property limits phase in
When taxable income exceeds the threshold, the wage and property limits don't apply in full right away. Instead, the reduction phases in over a range. For joint filers, this range spans from $321,400 up to $421,400. For single filers, it runs from $160,700 up to $210,700. Within that range, only a portion of the full wage and property limitation applies, and the applicable portion grows as income rises. Once taxable income reaches the top of the phase-in range, the full reduction is in effect. Taxpayers whose income falls between the threshold and the top of the range calculate their deduction using this partial version of the limit rather than the full version. Those whose income stays at or below the threshold do not need to reduce their qualified business income at all.
Above the threshold but below the phase-in range (more than $160,725 but not $210,725 if married filing separately or a married nonresident alien; $321,400 and $421,400 if married filing jointly; $160,700 and $210,700 for all others), the reduction is phased in
2019 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
What the reduction is measured against
When taxable income exceeds the threshold, the qualified business income deduction may be reduced. The reduction is measured against the greater of two alternative amounts. The first alternative is 50% of W-2 wages paid by the qualified trade or business. The second alternative is 25% of W-2 wages plus 2.5% of the unadjusted basis immediately after acquisition of qualified property from the qualified trade or business. The taxpayer uses whichever of these two figures is larger. The unadjusted basis immediately after acquisition refers to the original cost of depreciable property held by the business. These wage and property limits serve as a cap on how much qualified business income can be deducted once the taxpayer's income surpasses the threshold. If the business has significant wages or substantial depreciable assets, the limit will be higher and allow a larger deduction.
your QBI for each of your trades or businesses may be partially or fully reduced to the greater of 50% of W-2 wages paid by the qualified trade or business, or 25% of W-2 wages plus 2.5% of the UBIA of qualified property from the qualified trade or business.
2019 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
Specified service businesses above the range
A specified service trade or business is one that provides services in fields such as health, law, accounting, consulting, financial services, or performing arts. When a taxpayer's taxable income exceeds the threshold plus the phase-in range - meaning income above $421,400 for joint filers or above $210,700 for single filers - the specified service trade or business is completely excluded from the definition of a qualified trade or business. As a result, none of the income, wages, or qualified property from that service business can be taken into account when calculating the qualified business income deduction. This means taxpayers operating specified service businesses above this income level receive no deduction at all from those activities. The exclusion is total once income surpasses the phase-in range top, distinguishing it from the partial phase-in that applies at lower income levels.
SSTBs generally are excluded from the definition of a qualified trade or business if the taxpayer's taxable income exceeds the threshold plus the phase-in range.
2019 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
The deduction is also capped by taxable income
The qualified business income deduction cannot exceed 20% of the taxpayer's taxable income, calculated before the deduction and minus any net capital gain. This overall limit applies regardless of whether the taxpayer's income is above or below the threshold. Even if a taxpayer has substantial qualified business income, wages, or property that would otherwise support a larger deduction, the final amount is capped at 20% of taxable income minus net capital gain. This ceiling ensures the deduction remains proportional to the taxpayer's overall income. The limitation is calculated after determining the qualified business income component, including any reductions from the wage and property limits or the specified service business exclusions, and after adding any qualified real estate investment trust or publicly traded partnership components.
the deduction is limited to the lesser of this amount or 20% of your taxable income, calculated before the QBI deduction, minus your net capital gain.
2019 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
Choosing to aggregate your businesses locks you in for later years
Once a taxpayer elects to group two or more trades or businesses together as an aggregated group for the qualified business income deduction, that same grouping must be used in every later year. The IRS does not permit a taxpayer to regroup the same businesses differently from one year to the next. The only exception is when a significant change in facts and circumstances occurs that makes the aggregation no longer qualify - for example, if the businesses no longer share the required common control or coordinated operations. In that situation the taxpayer may regroup, but otherwise the original election binds all future years. In addition, Schedule B (Form 8995-A) must be filed each year to report the aggregation, and a taxpayer must also include any aggregation done by a relevant pass-through entity in which they hold an interest. Failure to disclose aggregated trades or businesses on Schedule B can result in the businesses being disaggregated. For 2019, taxpayers above the threshold of $321,400 for joint filers or $160,700 for single filers face additional limitations on the QBI deduction, making aggregation a powerful planning tool - but one that locks in the grouping for later years.
Your aggregations must be reported consistently for all subsequent years, unless there is a significant change in facts and circumstances that disqualify the aggregation.
2019 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
Crossing the threshold changes which form you must file
The form you use to claim the qualified business income deduction depends on your taxable income. Taxpayers whose 2019 taxable income (before the QBI deduction) exceeds $321,400 for joint filers or $160,700 for single filers must use Form 8995-A, which includes schedules for specified service trades or businesses, aggregation, loss carryforward, and cooperative patron rules. Those whose income falls at or below these thresholds - and who are not patrons in a specified agricultural or horticultural cooperative - use Form 8995 instead. Form 8995 is the Qualified Business Income Deduction Simplified Computation, and it does not require the detailed schedules that Form 8995-A demands. The threshold is the dividing line: once your taxable income crosses it, the IRS requires the full form with all of its supporting schedules, while below the threshold the simpler form suffices. S corporations and partnerships do not file either form themselves; instead they pass the necessary information through to their shareholders or partners on Schedule K-1.
Otherwise use Form 8995, Qualified Business Income Deduction Simplified Computation, to figure your QBI deduction.
2019 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
A loss year does not just vanish, it reduces next year's deduction
When a taxpayer's qualified business income deduction calculation produces a net loss rather than positive QBI, that loss does not simply disappear. Instead, it becomes a carryforward that offsets qualified business income in future tax years. The amount must be reported on Schedule C (Form 8995-A), line 2, or Form 8995, Line 3 in the next tax year. This carryforward applies regardless of whether the business that generated the loss is still operating - the loss follows the taxpayer, not the business. The carryforward reduces the QBI deduction available in subsequent years when positive income exists, but it does not affect the deductibility of the loss for other purposes under the Internal Revenue Code. For 2019, taxpayers with taxable income above the threshold of $321,400 for joint filers or $160,700 for single filers face additional limitations on the QBI deduction, but the loss carryforward rule applies to all taxpayers who experience a qualified business net loss, regardless of their income level.
This amount will offset QBI in subsequent tax years regardless of whether it is reported and whether the trade or business that generated the loss is still in existence.
2019 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
The self-employment tax and health insurance deductions you take elsewhere still shrink QBI here
When calculating qualified business income, taxpayers must reduce their business income by certain deductions that are claimed elsewhere on their return. These include the deductible part of self-employment tax, the self-employment health insurance deduction, and contributions to qualified retirement plans such as SEP, SIMPLE, and other qualified plans. These deductions are not part of the QBI deduction itself, but they reduce the underlying business income from which QBI is computed. A taxpayer must consider all items related to the trade or business when determining total QBI, including charitable contributions and unreimbursed partnership expenses. Failure to account for these deductions when calculating QBI would overstate the qualified business income and result in an incorrect deduction. For 2019, this rule applies to all taxpayers claiming the QBI deduction, regardless of whether their taxable income is above or below the threshold of $321,400 for joint filers or $160,700 for single filers.
To determine the total amount of QBI, the taxpayer must consider all items that are related to the trade or business including, but not limited to, charitable contributions, unreimbursed partnership expenses, business interest expense, deductible part of self-employment tax, self-employment health insurance deduction, and self-employed SEP, SIMPLE, and qualified plan deductions.
2019 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
2019 Instructions for Form 8995-A (IRS)
- Threshold, joint filers
exceeds the threshold ($160,725 if married filing separately or a married nonresident alien; $321,400 if married filing jointly; $160,700 for all others)
- Threshold, single filers
exceeds the threshold ($160,725 if married filing separately or a married nonresident alien; $321,400 if married filing jointly; $160,700 for all others)
- Phase-in range top, joint filers
phase-in range (more than $160,725 but not $210,725 if married filing separately or a married nonresident alien; $321,400 and $421,400 if married filing jointly; $160,700 and $210,700 for all others)
- Phase-in range top, single filers
phase-in range (more than $160,725 but not $210,725 if married filing separately or a married nonresident alien; $321,400 and $421,400 if married filing jointly; $160,700 and $210,700 for all others)
- Threshold, married filing separately
exceeds the threshold ($160,725 if married filing separately or a married nonresident alien; $321,400 if married filing jointly; $160,700 for all others)
- Phase-in range top, married filing separately
phase-in range (more than $160,725 but not $210,725 if married filing separately or a married nonresident alien; $321,400 and $421,400 if married filing jointly; $160,700 and $210,700 for all others)
- QBI component rate
Your QBI component is generally 20% of your QBI from your trades or businesses.
- Taxable income limit rate
However, the deduction is limited to the lesser of this amount or 20% of your taxable income, calculated before the QBI deduction, minus your net capital gain.
- W-2 wage limit rate
your QBI for each of your trades or businesses may be partially or fully reduced to the greater of 50% of W-2 wages paid by the qualified trade or business, or 25% of W-2 wages plus 2.5% of the UBIA of qualified property from the qualified trade or business.
- Alternative W-2 wage rate
your QBI for each of your trades or businesses may be partially or fully reduced to the greater of 50% of W-2 wages paid by the qualified trade or business, or 25% of W-2 wages plus 2.5% of the UBIA of qualified property from the qualified trade or business.
- Qualified property rate
your QBI for each of your trades or businesses may be partially or fully reduced to the greater of 50% of W-2 wages paid by the qualified trade or business, or 25% of W-2 wages plus 2.5% of the UBIA of qualified property from the qualified trade or business.