2020 QBI Deduction Threshold
For 2020, the QBI Deduction Threshold is $326,600 (Threshold, joint filers), $163,300 (Threshold, single filers), $426,600 (Phase-in range top, joint filers) and $213,300 (Phase-in range top, single filers).
| Item | Joint filers | Single filers |
|---|---|---|
| Threshold | $326,600 | $163,300 |
| Phase-in range top | $426,600 | $213,300 |
Effective 2020-01-01Source: 2020 Instructions for Form 8995-A (IRS)Verified 2026-08-29
Compared with 2019
| Item | 2019 | 2020 | Change |
|---|---|---|---|
| Threshold, joint filers | $321,400 | $326,600 | +$5,200 (+1.6%) |
| Threshold, single filers | $160,700 | $163,300 | +$2,600 (+1.6%) |
| Phase-in range top, joint filers | $421,400 | $426,600 | +$5,200 (+1.2%) |
| Phase-in range top, single filers | $210,700 | $213,300 | +$2,600 (+1.2%) |
Who it applies to
Individuals, estates, and trusts with qualified business income who file federal income tax returns for tax year 2020.
What changed this year, and why
The 2020 QBI deduction threshold amounts and phase-in ranges for the qualified business income deduction under Section 199A, as reported on Form 8995-A.
Common questions
- What is the QBI deduction threshold for 2020?
- For 2020, the threshold is $326,600 for married taxpayers filing jointly and $163,300 for single filers, married filing separately, head of household, qualifying widow(er), and trusts or estates.
- What is the phase-in range for the QBI deduction in 2020?
- For 2020, the phase-in range extends from $326,600 to $426,600 for joint filers and from $163,300 to $213,300 for single filers and all other filing statuses.
Above the threshold, the wage and property limits phase in
The phase-in range is the income band between the threshold and the phase-in range top where the wage and property limits are gradually applied rather than imposed in full. For 2020, joint filers have a phase-in range from $326,600 to $426,600, while single filers and other taxpayers have a range from $163,300 to $213,300. If your taxable income falls within this interval, only a percentage of the wage-and-property limit reduction applies to your qualified business income. The applicable percentage grows as your income rises through the range. Once taxable income reaches the top of the range, the full wage and property caps apply without any phase-in benefit.
Above the threshold but below the phase-in range (more than $326,600 and $426,600 if married filing jointly; $163,300 and $213,300 for all others), the reduction is phased in
2020 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
What the reduction is measured against
The wage and property limit reduces your qualified business income to the greater of two amounts: either 50% of the W-2 wages paid by the qualified trade or business, or 25% of those W-2 wages plus 2.5% of the unadjusted basis immediately after acquisition of qualified property held by the business. This limitation ensures that the QBI deduction is tied to actual payroll and capital investment in the business. The reduction applies when your taxable income exceeds the threshold amount, with the full limitation taking effect once income reaches the top of the phase-in range.
However, if your taxable income (before the QBI deduction) exceeds the threshold ($326,600 if married filing jointly; $163,300 for all others), 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.
2020 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
Specified service businesses above the range
Certain professions, including those in health, law, accounting, consulting, and financial services, are classified as specified service trades or businesses. For taxpayers whose taxable income is above both the threshold and the phase-in range, these service businesses are excluded entirely from the definition of qualified trades or businesses. This means income from a specified service business generates no QBI deduction once taxable income exceeds $426,600 for joint filers or $213,300 for single filers. Within the phase-in range, only a partial portion of the QBI from such a business is excluded, with the exclusion growing as income rises.
trades or businesses (SSTBs) aren’t qualified trades or businesses for taxpayers with taxable income, before the QBI deduction, above the threshold and phased-in range.
2020 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
The deduction is also capped by taxable income
The overall QBI deduction is subject to an absolute ceiling based on your total taxable income. Specifically, the deduction cannot exceed 20% of your taxable income calculated before the QBI deduction, minus your net capital gain. This cap applies regardless of your qualified business income, wage and property limitations, or any other component of the calculation. Even if your QBI component plus qualified REIT and PTP components would otherwise yield a larger deduction, this taxable income limitation takes precedence and restricts the final deduction amount.
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.
2020 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.
2020 Instructions for Form 8995-A (IRS)
- Threshold, joint filers
exceeds the threshold ($326,600 if married filing jointly; $163,300 for all others)
- Threshold, single filers
exceeds the threshold ($326,600 if married filing jointly; $163,300 for all others)
- Phase-in range top, joint filers
phase-in range (more than $326,600 and $426,600 if married filing jointly; $163,300 and $213,300 for all others)
- Phase-in range top, single filers
phase-in range (more than $326,600 and $426,600 if married filing jointly; $163,300 and $213,300 for all others)