2022 QBI Deduction Threshold
For 2022, the QBI Deduction Threshold figures are $340,100 (Threshold, joint filers), $170,050 (Threshold, single filers), $440,100 (Phase-in range top, joint filers) and 8 more figures below.
| Item | Joint filers | Single filers | Married filing separately |
|---|---|---|---|
| Threshold | $340,100 | $170,050 | $170,050 |
| Phase-in range top | $440,100 | $220,050 | $220,050 |
Effective 2022-01-01Source: Rev. Proc. 2021-45 (IRS)Verified 2026-09-04
QBI component rate, Taxable income limit rate, W-2 wage limit rate, Alternative W-2 wage rate, Qualified property rateSource: 2022 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)Verified 2026-09-04
Compared with 2021
| Item | 2021 | 2022 | Change |
|---|---|---|---|
| Threshold, joint filers | $329,800 | $340,100 | +$10,300 (+3.1%) |
| Threshold, single filers | $164,900 | $170,050 | +$5,150 (+3.1%) |
| Phase-in range top, joint filers | $429,800 | $440,100 | +$10,300 (+2.4%) |
| Phase-in range top, single filers | $214,900 | $220,050 | +$5,150 (+2.4%) |
| Threshold, married filing separately | $164,925 | $170,050 | +$5,125 (+3.1%) |
| Phase-in range top, married filing separately | $214,925 | $220,050 | +$5,125 (+2.4%) |
| QBI component rate | 20% | 20% | +0% (+0.0%) |
| Taxable income limit rate | 20% | 20% | +0% (+0.0%) |
| W-2 wage limit rate | 50% | 50% | +0% (+0.0%) |
| Alternative W-2 wage rate | 25% | 25% | +0% (+0.0%) |
| Qualified property rate | 2.5% | 2.5% | +0% (+0.0%) |
Threshold
Phase-in range top
$170,050$440,100
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
Taxpayers who claim the qualified business income deduction under IRC § 199A for taxable years beginning in 2022.
What changed this year, and why
For taxable years beginning in 2022, the income thresholds and phase-in ranges for the qualified business income (QBI) deduction under IRC § 199A were adjusted for inflation.
Common questions
- What is the QBI deduction threshold for 2022?
- For joint filers, the threshold is $340,100. For single filers, the threshold is $170,050.
- What is the phase-in range for the QBI deduction?
- The phase-in range runs from $340,100 to $440,100 for joint filers and from $170,050 to $220,050 for single filers.
Above the threshold, the wage and property limits phase in
Taxpayers with taxable income above the threshold but below the phase-in range top must gradually apply the wage and property limits to their qualified business income. For joint filers the phase-in range runs from $340,100 to $440,100, and for single filers and other returns it runs from $170,050 to $220,050. Within that band the reduction to QBI is phased in proportionally, so the wage and property caps only partially limit the deduction. Once taxable income exceeds the phase-in range top, the full reduction applies without any phase-in benefit.
Above the threshold but below the phase-in range (more than $340,100 and $440,100 if married filing jointly, and $170,050 and $220,050 for all other returns), the reduction is phased in;
2022 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
What the reduction is measured against
When taxable income exceeds the threshold, the QBI from each trade or business may be reduced to the greater of two amounts. The first is 50% of the W-2 wages the business paid. The second is 25% of those W-2 wages plus 2.5% of the unadjusted basis of qualified property held by the business. This wage-and-property limit caps the deduction for higher-income taxpayers, ensuring the benefit is tied to actual payroll or depreciable assets rather than purely pass-through income.
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.
2022 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
Specified service businesses above the range
Specified service trades or businesses, or SSTBs, are generally ineligible for the QBI deduction when a taxpayer's taxable income exceeds both the threshold and the phase-in range. This means that once income is above the applicable range, income from SSTBs such as law, accounting, health, consulting, and financial services cannot be included in qualified business income for purposes of calculating the deduction. The rule is designed to limit the benefit to active business income from non-service activities for higher-income taxpayers. However, taxpayers with taxable income at or below the threshold may still claim the deduction on SSTB income without restriction. The determination of whether a trade or business qualifies is made based on the nature of the activity and the taxpayer's income level.
Specified service 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.
2022 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
The deduction is also capped by taxable income
The total QBI deduction cannot exceed 20% of the taxpayer's taxable income, calculated before the deduction, minus any net capital gain. This overall ceiling applies regardless of filing status or the amount of qualified business income generated. Even if the underlying QBI component and the wage-and-property calculation produce a large figure, the deduction is capped at this taxable-income-based limit. The rule ensures the deduction is measured against the taxpayer's total economic income rather than only the income from pass-through activities.
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.
2022 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
Choosing to aggregate your businesses locks you in for later years
Once you choose to aggregate multiple trades or businesses for the qualified business income deduction on your federal return, that grouping is locked in going forward. The IRS requires that the same aggregation be reported every year after the initial election, unless a significant change in facts and circumstances makes the grouping no longer qualify. You cannot drop a business out of the group or rearrange which businesses are combined just because it would be more convenient or produce a better tax result in a later year. Each year you must complete Schedule B (Form 8995-A) to show the trades or businesses you have aggregated, and if you hold an interest in a relevant pass-through entity that itself aggregated businesses, you must include that aggregation as well. If you fail to disclose the aggregated trades or businesses on the schedule, the IRS may treat them as separate, disaggregated businesses, which could reduce or eliminate the benefits you were counting on.
If you choose to aggregate multiple trades or businesses, complete Schedule B (Form 8995-A) before starting Part I of Form 8995-A. Your aggregations must be reported consistently for all subsequent years, unless there is a significant change in facts and circumstances that disqualify the aggregation.
2022 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
Crossing the threshold changes which form you must file
If your federal taxable income for 2022 exceeds the threshold, you must use Form 8995-A to figure your qualified business income deduction. The threshold for 2022 is $340,100 for taxpayers filing jointly and $170,050 for all other returns, including single filers. Taxpayers who also have income from specified agricultural or horticultural cooperatives must use Form 8995-A regardless of income level. If your taxable income is at or below the threshold and you are not a cooperative patron, you may instead use Form 8995, the simplified computation, which does not require the supplemental schedules for specified service trades or businesses, aggregation elections, or loss carryforwards. This means that crossing the threshold not only subjects your deduction to wage and property limitations but also changes which form you must file to claim it.
Otherwise, use Form 8995, Qualified Business Income Deduction Simplified Computation, to figure your QBI deduction.
2022 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
A loss year does not just vanish, it reduces next year's deduction
If your qualified business income from a trade or business is negative for a federal tax year, that loss does not simply disappear. The negative amount is carried forward and must be reported in the next tax year as a qualified business net loss carryforward. That carried-forward loss will offset positive qualified business income in future years, reducing the deduction you can claim, regardless of whether you actually report it on your return and regardless of whether the trade or business that generated the loss still exists. The carryforward does not affect the deductibility of the loss for other provisions of the Internal Revenue Code; it operates separately for purposes of the qualified business income deduction. If you have an overall qualified business net loss carryforward for the year and no qualified REIT dividends or qualified PTP income, you do not qualify for a qualified business income deduction in that current year at all.
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. This carryforward doesn’t affect the deductibility of the loss for purposes of any other provisions of the Code.
2022 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 your federal qualified business income, you must take into account all items attributable to the trade or business, including certain deductions you claim elsewhere on your return. Specifically, the deductible part of self-employment tax, the self-employment health insurance deduction, and contributions to qualified retirement plans all reduce the amount of qualified business income you can report. These are not added back or ignored; they are subtracted as part of figuring the net qualified business income from the activity. So even though you may think of these as personal or above-the-line deductions, they still shrink the base from which your qualified business income deduction is computed. Other items that reduce qualified business income include unreimbursed partnership expenses and business interest expense attributable to the trade or business.
This includes, but isn’t limited to, unreimbursed partnership expenses, business interest expense, deductible part of self-employment tax, self-employment health insurance deduction, and contributions to qualified retirement plans.
2022 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.
Rev. Proc. 2021-45 (IRS)
- Threshold, joint filers
Married Individuals Filing Joint Returns $340,100 $440,100
- Threshold, single filers
All Other Returns $170,050 $220,050
- Phase-in range top, joint filers
Married Individuals Filing Joint Returns $340,100 $440,100
- Phase-in range top, single filers
All Other Returns $170,050 $220,050
- Threshold, married filing separately
Married Individuals Filing Separate Returns $170,050 $220,050
- Phase-in range top, married filing separately
Married Individuals Filing Separate Returns $170,050 $220,050
2022 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
- QBI component rate
Your QBI component is generally 20% of your QBI from your domestic 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.