2024 QBI Deduction Threshold
For 2024, the QBI Deduction Threshold figures are $383,900 (Threshold, joint filers), $191,950 (Threshold, single filers), $483,900 (Phase-in range top, joint filers) and 8 more figures below.
| Item | Joint filers | Single filers | Married filing separately |
|---|---|---|---|
| Threshold | $383,900 | $191,950 | $191,950 |
| Phase-in range top | $483,900 | $241,950 | $241,950 |
Effective 2024-01-01Source: Rev. Proc. 2023-34 (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: 2024 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)Verified 2026-09-04
Compared with 2023
| Item | 2023 | 2024 | Change |
|---|---|---|---|
| Threshold, joint filers | $364,200 | $383,900 | +$19,700 (+5.4%) |
| Threshold, single filers | $182,100 | $191,950 | +$9,850 (+5.4%) |
| Phase-in range top, joint filers | $464,200 | $483,900 | +$19,700 (+4.2%) |
| Phase-in range top, single filers | $232,100 | $241,950 | +$9,850 (+4.2%) |
| Threshold, married filing separately | $182,100 | $191,950 | +$9,850 (+5.4%) |
| Phase-in range top, married filing separately | $232,100 | $241,950 | +$9,850 (+4.2%) |
| 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
$191,950$483,900
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 QBI deduction on their 2024 federal income tax returns, including owners of pass-through businesses, sole proprietors, and certain rental real estate activities.
What changed this year, and why
The IRS published the inflation-adjusted thresholds for the qualified business income deduction under section 199A for taxable years beginning in 2024. These figures determine when the wage and qualified property limitations begin to apply and when the deduction is fully phased in.
Common questions
- What is the QBI deduction threshold for 2024?
- For taxable years beginning in 2024, the QBI deduction threshold is $383,900 for married individuals filing joint returns and $191,950 for single filers, married individuals filing separate returns, and all other taxpayers. If taxable income is at or below the threshold, the full QBI deduction is generally available without regard to the wage and qualified property limitations.
- What is the phase-in range for the QBI deduction in 2024?
- For taxable years beginning in 2024, the phase-in range top is $483,900 for married individuals filing joint returns and $241,950 for single filers, married individuals filing separate returns, and all other taxpayers. Within this range - between the threshold amount and the phase-in range top - the wage and qualified property limitations are gradually applied. Once taxable income exceeds the phase-in range top, the full limitations apply.
Every amount on this page is a published figure rather than yours. The QBI deduction on any other return takes the number you enter and works it out against them, showing which published figure it used.
Above the threshold, the wage and property limits phase in
Once taxable income passes the threshold, the wage and property limits do not apply in full right away. Instead, the reduction is phased in over a range. For 2024, the phase-in range spans from $383,900 to $483,900 for married taxpayers filing jointly, and from $191,950 to $241,950 for single filers and all other returns. Within that band, the portion of the wage-or-property reduction that must be applied grows gradually as income rises. Taxpayers whose taxable income lands above the phase-in range top ($483,900 joint, $241,950 other) must apply the full wage and property limit to every qualified trade or business. Those at or below the threshold owe no reduction at all. The phase-in rule ensures that the transition from an unrestricted QBI component to a fully limited one is smooth rather than abrupt.
If your taxable income (before the QBI deduction) is: • At or below the threshold, you don’t need to reduce your QBI; • Above the threshold but below the phase-in range (more than $383,900 and $483,900 if married filing jointly, and $191,950 and $241,950 for all other returns), the reduction is phased in; or • Above the threshold and phase-in range, the full reduction applies.
2024 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
What the reduction is measured against
When taxable income (before the deduction) exceeds the applicable threshold, the qualified business income from each trade or business may be partially or fully reduced. The reduction measures QBI against a floor defined by wages and the unadjusted basis of qualified property. Specifically, QBI cannot be reduced below the greater of two amounts: half of the wages paid by the qualified trade or business, or one-quarter of those wages plus a percentage of the unadjusted basis immediately after acquisition of qualified property held by the business. These wage and property limits therefore set the minimum level of QBI that can still be counted once taxable income is above the threshold and the phase-in range has been completed.
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.
2024 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
Specified service businesses above the range
Specified service trades or businesses are generally excluded from the definition of a qualified trade or business when a taxpayer’s taxable income, before the deduction, exceeds the threshold plus the phase-in range. For 2024, that means the exclusion applies once taxable income is above $483,900 for married filing jointly or above $241,950 for single filers and other returns. When such a business is excluded, none of its income, wages, or unadjusted basis of qualified property are taken into account when figuring the deduction. If the service business is conducted through a pass-through entity, the same limitation applies to the pass-through items. Taxpayers whose income falls within the phase-in range may still take a partial amount into account, but those above the top of the range lose the benefit entirely for that business.
SSTBs are generally excluded from the definition of a qualified trade or business if the taxpayer's taxable income exceeds the threshold plus the phase-in range.
2024 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
The deduction is also capped by taxable income
The total QBI deduction is the sum of the QBI component and the qualified REIT and qualified PTP component. However, regardless of how that sum is calculated, the deduction cannot exceed 20% of taxable income, calculated before the QBI deduction, minus any net capital gain (increased by any qualified dividends). This overall taxable income limit applies in addition to the wage and property limits that may reduce the QBI component for higher-income taxpayers. As a result, the final deduction is the lesser of this amount or 20% of taxable income minus net capital gain, ensuring the benefit never exceeds one-fifth of the taxpayer’s income after capital gains are excluded.
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 (increased by any qualified dividends).
2024 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
Choosing to aggregate your businesses locks you in for later years
Once you decide to group (aggregate) two or more trades or businesses together for the qualified business income deduction on Schedule B of Form 8995-A, that grouping is effectively permanent. The IRS requires that your aggregation choices be applied the same way every year going forward. The only exception is if a significant change in facts and circumstances occurs that disqualifies the aggregation under the rules. Each year you must complete Schedule B to show which trades or businesses are aggregated, and you cannot pick and choose different groupings from year to year. If you fail to disclose the aggregated trades or businesses consistently, the IRS may disaggregate them on its own. Before making an aggregation election, consider the long-term impact, because this is not an annual choice you can revisit freely.
Your aggregations must be reported consistently for all subsequent years, unless there is a significant change in facts and circumstances that disqualify the aggregation.
2024 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
Crossing the threshold changes which form you must file
For 2024, if your taxable income before the QBI deduction is more than $383,900 for married filing jointly or $191,950 for all other returns, or if you are a patron in a specified agricultural or horticultural cooperative, you must use Form 8995-A to figure your deduction. If you do not meet those conditions, you must use Form 8995, Qualified Business Income Deduction Simplified Computation, instead. The threshold amounts determine which form is required; crossing them moves you from the simplified computation to the more detailed form that accounts for wage and property limitations as well as specified service trade or business restrictions. S corporations and partnerships do not file either form because they are not eligible for the deduction themselves; instead, they pass through the necessary information to their shareholders or partners on an attachment to Schedule K-1.
Otherwise, use Form 8995, Qualified Business Income Deduction Simplified Computation, to figure your QBI deduction.
2024 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 deduction is reduced to zero because of a net business loss, that loss does not simply disappear. The amount that would have been deducted is carried forward and reported on Schedule C (Form 8995-A), line 2, or Form 8995, line 3, as qualified business net loss carryforward from prior years. This carryforward amount will offset QBI in subsequent tax years regardless of whether it is reported and regardless of whether the trade or business that generated the loss is still in existence. The carryforward reduces your QBI deduction in future years, but it does not affect the deductibility of the loss for purposes of any other provisions of the Internal Revenue Code. In effect, a loss year creates a deferred reduction in your future QBI deductions.
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.
2024 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
To figure the total amount of qualified business income, you must consider all items that are attributable to the trade or business. This includes, but is not limited to, unreimbursed partnership expenses, business interest expense, the deductible part of self-employment tax, the self-employment health insurance deduction, and contributions to qualified retirement plans. These deductions, which you claim elsewhere on your return, reduce the amount of QBI that is available for the QBI deduction. In other words, the QBI deduction is calculated on a net basis after taking into account these business-related deductions. This means that claiming these deductions for self-employment tax, health insurance, or retirement plan contributions lowers your QBI and therefore lowers your QBI deduction.
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.
2024 Instructions for Form 8995-A, Deduction for Qualified Business Income (IRS)
Your own S corporation salary or partnership guaranteed payment is not QBI
Qualified business income does not include amounts received as reasonable compensation from an S corporation. If you are a shareholder-employee of an S corporation and you receive a salary for services rendered, that salary is treated as wage income, not QBI, even though it comes from a pass-through entity. Similarly, amounts received as guaranteed payments from a partnership, or amounts received as payments by a partner for services other than in a capacity as a partner, are excluded from QBI. These payments are treated as compensation for services rather than as income from the trade or business itself. The QBI deduction is intended to apply to the business's net income, not to compensation that has already been separated out as wages or guaranteed payments.
Amounts received as reasonable compensation from an S corporation.
2024 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. 2023-34 (IRS)
- Threshold, joint filers
Married Individuals Filing Joint Returns $383,900 $483,900
- Threshold, single filers
All Other Returns $191,950 $241,950
- Phase-in range top, joint filers
Married Individuals Filing Joint Returns $383,900 $483,900
- Phase-in range top, single filers
All Other Returns $191,950 $241,950
- Threshold, married filing separately
Married Individuals Filing Separate Returns $191,950 $241,950
- Phase-in range top, married filing separately
Married Individuals Filing Separate Returns $191,950 $241,950
2024 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 (increased by any qualified dividends).
- 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.