The 20% pass-through deduction is permanent now, and the income range where it phases out just got wider. Here's what actually changed and why it's worth a real look.
If you've been claiming the Qualified Business Income deduction for a few years already, you probably think of it as background noise — something your software calculates and you don't think about much. That's fair for most of its life. But a few things changed for 2026 under last year's tax law (the One Big Beautiful Bill Act), and if your income has crept up over the years you've been self-employed, this is worth ten minutes of actual attention instead of autopilot.
The QBI deduction was set to expire at the end of 2025. It didn't. The 20% deduction on qualified business income is now a permanent part of the tax code, not something Congress has to keep renewing. If you'd been half-expecting to lose this, you can stop bracing for it.
The part that matters more if you're an established, higher-earning freelancer is the phase-out. For 2026, the full deduction is available up to $201,750 in taxable income if you're single or head of household, and $403,500 if you're married filing jointly. Above that, the deduction starts phasing out — but the range over which it phases out is now $75,000 for single filers and $150,000 for joint filers, wider than it used to be. That means the deduction doesn't disappear as abruptly once you cross the threshold, and specified service businesses (think consultants, and other service-based S-corps) get more breathing room before losing it entirely.
There's also a new $400 minimum deduction if you have at least $1,000 in qualified business income and materially participate in your business — mostly aimed at people with a smaller side business where the regular 20% math worked out to almost nothing.
Pull your projected 2026 taxable income — not just your gross revenue — and see roughly where you land against the $201,750 / $403,500 starting thresholds. If you're within striking distance of that line, this is exactly the kind of number worth checking now, mid-year, while there's still time to influence it through retirement contributions or timing decisions — not in March when the year's already locked in.
The phase-out math gets more layered if you run a specified service trade or business, or if you're paying yourself through an S-corp — the wage and property limitations that kick in above the threshold depend on details specific to your setup. That's genuinely not something to guess at from a blog post. If you've never actually run these numbers against your real income, that's worth a real conversation rather than an assumption either way.
This is precisely the kind of thing a mid-year check-in is built to catch — not just this deduction, but whatever else has quietly shifted since you last looked closely. If you want a calm, guided way to walk through your whole tax picture, The Calm & Confident Tax Prep Kit gives you that rhythm all year. Or start with the free Mid-Year Tax Reset and see where you actually stand in one sitting.
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