The QBI deduction (IRC Section 199A) lets eligible owners of pass-through businesses deduct up to 20% of their qualified business income on their personal return, subject to income thresholds and limitations. It reduces the effective tax rate on business profits that flow through to the owner.
Qualified business income is the net income from a qualified trade or business operated as a pass-through entity — a sole proprietorship, partnership, S corporation, or most LLCs. Under IRC Section 199A, eligible owners can deduct up to 20% of that income on their individual return, in addition to their normal business deductions. The deduction phases in limitations above annual income thresholds (indexed each year), and certain 'specified service' businesses (law, accounting, consulting, health) face additional limits at higher incomes. The IRS explains eligibility and the wage/property limitations in its Qualified Business Income Deduction guidance (https://www.irs.gov/newsroom/qualified-business-income-deduction). Because it lowers the after-tax cost of profits, QBI is a core planning item for self-employed owners — closely tied to [[self-employment-tax]] and entity choice.
Owners of pass-through businesses — sole proprietors, partners, S-corp shareholders, and most LLC members — with qualified business income. Above annual income thresholds, wage/property limits and specified-service-business rules can reduce it. See IRS Section 199A guidance.
No. It is an additional deduction of up to 20% of net qualified business income, taken on your personal return on top of your ordinary business expense deductions — not a deduction against business revenue.