Qualified business income
By Jude Wallis
Qualified business income, or QBI, is generally net profit from a pass-through trade after stated add-backs and haircuts. In the uncapped teaching case the deduction is 20 percent of QBI.
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The deduction lowers income that enters the stacked income-tax schedule. It does not lower self-employment tax. W-2 wages as an employee are not QBI.
Once taxable income clears a threshold, wage-and-property tests and specified-service rules can cut or remove the deduction. Those tests are inputs, not the 20 percent line.
How the QBI deduction works is the explainer. The QBI deduction calculator is the uncapped percent.