How the Qualified Business Income Deduction Works for Small Business Owners

Lucas and Luna break down Section 199A, the Qualified Business Income deduction that lets many small business owners deduct up to 20% of their pass-through income. They walk through the phase-in thresholds for 2026: $197,300 for single filers and $394,600 for married filing jointly. They explain the key limitation—specified service trades or businesses like doctors, lawyers, and consultants get a phased-out deduction above those thresholds—and the wage-and-property limit that caps the deduction at the greater of 50% of W-2 wages or 25% of wages plus 2.5% of the unadjusted basis of qualified property. Using a concrete example of a freelance graphic designer earning $250,000, they show how the deduction phases out and how proper tax planning—like timing equipment purchases or hiring—can preserve more of it. This episode gives business owners a clear, actionable understanding of one of the most valuable but complex tax breaks from the Tax Cuts and Jobs Act. #QBI #Section199A #SmallBusinessTax #PassThroughIncome #TaxDeduction #FreelancerTax #BusinessOwner #TaxPlanning #Finance #TaxStrategy #FexingoBusiness #BusinessPodcast #TaxTips #SelfEmployed #WageLimit #SpecifiedService #TaxCutsAndJobsAct #IncomeTax Keep every episode free: buymeacoffee.com/fexingo