The 20% deduction most freelancers get and half forget to claim.
If you're a sole proprietor, the QBI deduction knocks up to 20% off the income the IRS taxes. No LLC required, no election to file — just claim it.
Tax data last updated: July 2026. Sources & methodology
Your numbers
Your net profit from the business — 1099 income minus expenses.
Roughly: total income minus the standard deduction and half your SE tax.
You're under the $201,750 threshold — full 20% applies.
- 20% of qualified income
- $12,000
- Percentage that survives phase-out
- 100%
- Deduction
- $12,000
- Estimated federal tax saved
- $1,440
Simplified single-filer model for freelancers without employees. Above the income threshold the real rules split by business type (SSTB or not) and bring in W-2 wage and property tests this tool doesn't cover — at that income, a CPA pays for themselves. QBI lowers income tax only, never SE tax.
How this is calculated
Below the income threshold ($201,750 taxable income for single filers in 2026), the math is genuinely simple: 20% of your qualified business income, or 20% of taxable income if that's lower. Above the threshold, the deduction shrinks across a $75,000 range in our simplified model.
Since 2026 the deduction is permanent (the OBBBA removed the old expiration date) and there's a new floor: at least $400 of deduction if you have $1,000+ of qualified income. One thing that never changes — QBI reduces income tax only. Self-employment tax is computed before it and isn't touched.