2025 QBI Deduction Threshold

Who it applies to

The threshold amount matters to a taxpayer claiming the qualified business income deduction under § 199A for a taxable year beginning in 2025, and which figure applies depends only on filing status. Rev. Proc. 2024-40 puts married individuals filing joint returns on $394,600 and puts every other return, including a single filer, a head of household and a married individual filing separately, on $197,300. The revenue procedure supplies the amounts and nothing else: the rules in § 199A that use the threshold and the phase-in range, including how a specified service trade or business is treated once income passes the threshold, are in the Code section rather than in this document.

What changed this year, and why

For taxable years beginning in 2025, Rev. Proc. 2024-40 sets the threshold amount under § 199A(e) at $394,600 for married individuals filing joint returns and at $197,300 for all other returns, including married individuals filing separate returns. Alongside each threshold the revenue procedure states a phase-in range amount under § 199A(b) and § 199A(d), and in every row that range amount is larger than the threshold amount it sits beside. All of these are inflation-adjusted items, generally determined by reference to § 1(f), and the procedure states them for Code provisions as in effect on October 22, 2024.

Common questions

What is the 2025 QBI deduction threshold for married filing jointly?

For taxable years beginning in 2025 the threshold amount under § 199A(e) for married individuals filing joint returns is $394,600. Rev. Proc. 2024-40 states it in the qualified business income item, alongside a separate and larger phase-in range amount for the same filing status. The threshold is the point the § 199A rules key off; the revenue procedure sets the number without restating what happens above it.

What is the 2025 QBI threshold for a single filer?

$197,300. Rev. Proc. 2024-40 groups single filers under all other returns, which carries a threshold amount of $197,300 under § 199A(e) for taxable years beginning in 2025. That row also carries its own phase-in range amount, which is larger than the threshold. A single filer therefore works from a lower threshold than the $394,600 that applies to a joint return.

What is the QBI threshold for married filing separately in 2025?

The table in Rev. Proc. 2024-40 lists married individuals filing separate returns as their own row, and for taxable years beginning in 2025 it carries the same threshold amount as all other returns, $197,300. The phase-in range amount for that row matches the all other returns row as well. Filing separately therefore does not give a couple two joint-level thresholds.

What is the QBI threshold for head of household in 2025?

Rev. Proc. 2024-40 does not give heads of household a row of their own. The qualified business income table has three rows: married individuals filing joint returns, married individuals filing separate returns, and all other returns. A head of household falls in all other returns, so the threshold amount for taxable years beginning in 2025 is $197,300 and the phase-in range amount is the one stated in that same row.

What is the difference between the QBI threshold and the phase-in range amount?

They are two separate columns in the same table. The threshold amount is set under § 199A(e); the phase-in range amount is set under § 199A(b) and § 199A(d). For every filing status Rev. Proc. 2024-40 lists, the phase-in range amount is the larger of the two, so the range amount marks the far end of the band that opens at the threshold rather than a second, competing cut-off.

Does Rev. Proc. 2024-40 set the QBI deduction percentage?

No. The qualified business income item sets only the threshold amounts under § 199A(e) and the phase-in range amounts under § 199A(b) and § 199A(d) for taxable years beginning in 2025. The deduction percentage, the wage and property limits, and the treatment of a specified service trade or business are all in § 199A itself, and this revenue procedure does not restate any of them.

Which tax year does the $394,600 QBI threshold apply to?

Rev. Proc. 2024-40 states the qualified business income amounts for taxable years beginning in 2025, and the general rule in the procedure's effective date section applies the revenue procedure to taxable years beginning in 2025. Qualified business income is not one of the items routed to the calendar year rule instead, so the figure follows the taxpayer's taxable year rather than the calendar year.

Where do the QBI threshold amounts come from?

They are the threshold amounts in § 199A(e) of the Internal Revenue Code, as adjusted for inflation. Rev. Proc. 2024-40 publishes the adjusted figures for 2025 in its qualified business income item, and the procedure says the inflation-adjusted items it sets out are generally determined by reference to § 1(f). The IRS is applying the statute's indexing rule rather than selecting a new number each year.

Every amount on this page is a published figure rather than yours. The QBI deduction threshold headroom takes the number you enter and works it out against them, showing which published figure it used.