The Section 199A deduction lets most pass-through owners write off up to 20% of their business income. Below the income threshold that is all there is to it. Above it, three separate limits — the W-2/UBIA cap, the SSTB phase-out, and the overall taxable-income cap — decide how much survives. Here is how they interact, and how an S-corp salary quietly changes the math.

The clean 20% — and where it ends

If your taxable income is at or below the 2026 threshold ($201,750 Single, $403,500 MFJ), the deduction is refreshingly simple: 20% of your qualified business income, subject only to an overall cap of 20% of taxable income minus net capital gain. Whether you run a law firm or a landscaping crew makes no difference down here. The complexity only begins once taxable income climbs past the threshold.

The W-2 wage and UBIA limit

Above the threshold, every business faces the wage-and-property cap: the deduction cannot exceed the greater of 50% of the W-2 wages the business pays, or 25% of those wages plus 2.5% of the unadjusted basis (UBIA) of qualified property. Inside the phase-in range the limit is applied only in proportion to how far you are through the band, which is why the deduction tapers smoothly rather than dropping off a cliff.

The SSTB cliff

Specified service businesses — health, law, accounting, consulting, athletics, financial and brokerage services, and any firm whose principal asset is its owners' reputation or skill — get an extra reduction. Across the phase-in range, an applicable percentage shrinks their QBI, wages, and UBIA toward zero, so the two reductions compound. At the top of the range an SSTB's deduction is $0, regardless of wages paid.

The S-corp salary tension

For an S-corp owner above the threshold, salary is a double-edged sword. Paying yourself more W-2 wages raises the base for the 50%-of-wages limit, but every dollar of salary also lowers QBI, shrinking the 20%. The result is a sweet spot: a salary of roughly two-sevenths of pre-salary profit maximizes the deduction. The wage solver tab computes both the wage base that preserves your full 20% and that optimal split.

What this tool models — and what it does not

This calculator follows the Form 8995-A logic for a single trade or business. It does not model multi-business aggregation, REIT dividends or publicly traded partnership income (which form a separate 20% component), qualified cooperative income, or loss carryforwards. If your situation involves any of those, treat the result as an estimate and confirm the figures with a tax professional.