The 2026 Section 199A Calculation

Beginning in 2026, the Section 199A qualified business income deduction becomes a permanent part of tax planning for pass-through business owners. This deduction can allow owners of sole proprietorships, partnerships, S corporations, and certain other pass-through businesses to deduct up to 20 percent of their qualified business income. C corporations do not qualify.

2026 Section 199A Deduction Changes

The 2026 rules bring several favorable changes. First, the deduction no longer expires after 2025. Second, the income phase-in ranges increase, which may allow more taxpayers to receive at least a partial deduction. For 2026, the threshold is $201,775 for single filers and heads of household, and $403,500 for married couples filing jointly.

Planning Opportunities Above the Income Threshold

If your taxable income is at or below these amounts, the deduction is generally straightforward, and most types of pass-through businesses can qualify. If your taxable income exceeds the threshold, planning becomes more important. W-2 wages, qualified business property, retirement plan contributions, and business structure may affect the amount of your deduction. Certain service businesses, such as law, health, accounting, consulting, and financial services, may face additional limits at higher income levels.

New Minimum Section 199A Deduction for Some Taxpayers

The new rules also create a $400 minimum deduction for some taxpayers with at least $1,000 of qualified business income from an active trade or business.

How We Can Help

Sterling Tax and Accounting is here to help your business with tax planning!  Our comprehensive approach to tax planning helps reduce your overall tax liability and keep more money in your pocket.  If all your accountant does is file your taxes, chances are they are making you pay more than your fair share of taxes.

Learn how to proactively save on taxes by scheduling a call with our tax planning specialists. Our tax planning, accounting & business services help you stay on track. Sterling Tax & Accounting will work with you to optimize your business and minimize your taxes. We will work to provide you and your business with the tools and resources you need to build a solid tax and business foundation. We’re a trusted CPA Firm in Sarasota, Florida. We serve clients all over the US, and proactively work to minimize their taxes. Welcome to the Sterling Standard of business!  Want to learn more?  Schedule a meeting with our tax planning team.