Looking for QBI Savings? 10 Things You Should Know About the New 2026 Rules

Remember a few years ago when everyone was panicking that the "Tax Cuts and Jobs Act" (TCJA) was going to sunset and take our favorite tax breaks with it? Well, keep your shirt on, we’ve got some good news. Thanks to the One Big Beautiful Bill Act (OBBBA), the Section 199A Qualified Business Income (QBI) deduction isn't just surviving; it’s actually getting a makeover for 2026.

If you’re a business owner making over $1M, you’ve likely relied on that sweet 20% deduction to keep your tax bill from skyrocketing. But the rules of the game are shifting. At SJ Accounting Services LLC, we’ve been digging through the fine print so you don’t have to. It’s actually kind of ridiculous how much the "standard" advice changes every time a new bill passes, but that’s why you have us.

Whether you're a sole proprietor or running a complex S-Corp, here are the 10 things you absolutely need to know about the 2026 QBI rules.

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1. It’s Permanent (Yes, Really!)

For a long time, the QBI deduction was like that temporary "pop-up" shop, great while it lasted, but scheduled to disappear after 2025. The OBBBA changed all that. The deduction has been made permanent. This is a massive win for pass-through entities. No more "will they or won't they" every election cycle. You can now build your multi-year tax planning around this deduction with actual confidence.

2. The 20% Base Rate Remains

The headline number hasn't changed. You can still deduct up to 20% of your qualified business income from your taxable income. If your business nets $500,000, that’s potentially a $100,000 deduction right off the top. While the "how" of getting there has some new twists, the "how much" remains one of the most powerful tools in your arsenal.

3. Wider Phase-Out Ranges

This is where it gets interesting for our high-net-worth clients. Under the old rules, the "phase-out" range (where the deduction starts to get limited based on wages and property) was pretty tight. For 2026, those ranges have been widened.

• Non-joint filers: The range increases to $75,000.

• Married Filing Jointly (MFJ): The range expands to $150,000. Practically speaking, this means more business owners will find themselves in the "partial" zone rather than getting cut off entirely. If you’ve felt like you were "getting murdered" by the old thresholds, these new wider lanes are a welcome relief.

4. The New $400 "Minimum Deduction"

If you’re running a smaller side-hustle or a newer venture that hasn't hit the $1M revenue mark yet, the IRS actually threw you a bone. Starting in 2026, if you have at least $1,000 of QBI from active participation, you get a minimum $400 deduction. It’s not going to buy you a yacht, but it ensures that even at higher income levels, small active businesses get something.

5. SSTBs Get a "Softer Landing"

If you’re in a Specified Service Trade or Business (SSTB), think doctors, lawyers, and yes, even accountants, you know the pain of the "cliff." In the past, once you hit a certain income level, your QBI deduction vanished into thin air. The 2026 rules apply limitations more gradually (specifically to 75% of the excess income above the threshold). It’s a smoother, less painful reduction. If this speaks to you, it’s worth a deep dive with our team to see exactly where your "cliff" has turned into a "slope."

6. Inflation Indexing is Your Friend

The income thresholds for 2026 are being pushed higher to account for inflation. While we’re still waiting for the final IRS "official" numbers, early estimates suggest the starting threshold for the full deduction will be around $200,000 for single filers and $400,000 for MFJ. At SJ Accounting Services LLC, we keep a close eye on these shifting numbers so your virtual CFO strategies stay accurate.

7. Wage and Property Limits: The "Greater Of" Rule

Once you’re above those income thresholds, the deduction is limited to the greater of:

• 50% of the W-2 wages paid by the business, OR

• 25% of the W-2 wages + 2.5% of the unadjusted basis (UBIA) of qualified property. This is where many business owners get tripped up. If you don't have enough W-2 wages (looking at you, sole props and certain S-Corp owners taking low salaries), your QBI deduction could be $0. This is why our complete bookkeeping and payroll advisory is so critical, you can't just wing it.

8. BDC Interest Dividends Join the Party

For the investors among us, the OBBBA expanded what counts as "qualifying income." Certain Business Development Company (BDC) interest-type dividends can now be included in the QBI context. This broadens the net for high-net-worth individuals who have diversified portfolios. It’s a bit technical, but it’s essentially more ways to save on your tax bill.

9. Complexity Requires Form 8995-A

If your situation is simple (income below the thresholds), you use the standard Form 8995. But if you’re a high-earner, an SSTB owner, or dealing with wage/property limits, you’re moving into Form 8995-A territory. This form is a beast. Honestly, trying to do this yourself is a hit or miss, and usually, it's a miss. Our team ensures that every box is checked so you don't trigger an unnecessary audit.

10. Strategic Aggregation is Still on the Table

If you own multiple businesses, you might be able to "aggregate" them to maximize the deduction. For example, if one business has high income but low wages, and another has low income but high wages, combining them (on paper) could unlock a massive QBI deduction that would otherwise be lost. This hasn't changed for 2026, but with the new thresholds, your old aggregation strategy might need a reboot.

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Is Your Strategy Ready for 2026?

The 2026 QBI rules are a double-edged sword. On one hand, the deduction is permanent and the thresholds are more generous. On the other hand, the math has become even more layered. If you're a business owner with $1M+ in revenue, "good enough" accounting just won't cut it anymore.

We pride ourselves on being more than just "tax preparers." We are your partners in growth. Whether it's navigating the One Big Beautiful Bill Act or setting up a virtual controller system, we’ve got your back.

If this speaks to you, please don't wait until April 2027 to find out you missed out on tens of thousands in savings.Schedule a consultation with Sion and the team today and let’s make sure your 2026 plan is airtight.

Wishing you a profitable and tax-efficient year ahead!

Best regards,

The SJ Accounting Services Team