The 20% Qualified Business Income (QBI) deduction was one of the biggest tax breaks to come out of the 2017 tax law — and it was scheduled to disappear entirely after 2025. The One Big Beautiful Bill Act changed that, making the deduction a permanent part of the tax code and adjusting several of the rules around it for 2026.
What the QBI deduction still does
Freelancers, sole proprietors, and other pass-through business owners can generally deduct up to 20% of their qualified business income, reducing taxable income without requiring a single receipt tied to that specific deduction — it's calculated off your net profit, not off spending. This mechanic did not change under the new law; what changed is that it will no longer expire.
The scheduled expiration is gone
Under the original 2017 legislation, the QBI deduction was set to sunset after the 2025 tax year, meaning 2026 was shaping up to be the last year millions of freelancers would have this deduction at all. The One Big Beautiful Bill Act removed that expiration date entirely, so the deduction now continues indefinitely under current law.
A new minimum deduction for smaller businesses
For 2026, the law adds a guaranteed minimum QBI deduction of $400 for any taxpayer who materially participates in a qualifying trade or business with at least $1,000 of qualified business income — even in years where the standard 20%-of-income formula would produce less than that. This mainly helps freelancers in a slow year or just starting out, where 20% of a small profit might otherwise round down to very little.
Wider income ranges before the phase-out kicks in
For specified service trades or businesses (SSTBs) — a category that includes many consultants, freelance writers, coaches, and other service-based freelancers — the deduction phases out once taxable income crosses a threshold. For 2026, that phase-out range widens, running from roughly $201,750 to $276,750 for single and head-of-household filers, and roughly $403,500 to $553,500 for joint filers. Landing inside this range no longer means an abrupt cutoff; more income now falls in the gradual phase-out zone rather than losing the deduction outright.
Frequently asked questions
Do I need to do anything differently to claim the QBI deduction in 2026?
No — it's calculated automatically based on your qualified business income when you file, generally via Form 8995 or 8995-A. There's no separate election required to keep receiving it now that it's permanent.
Does the $400 minimum deduction apply to every freelancer?
It applies specifically to taxpayers who materially participate in a business with at least $1,000 of qualified business income for the year — check with a tax professional if your involvement or income level is borderline.
Is my freelance writing or consulting business considered an SSTB?
Many service-based freelance businesses fall under the specified service trade or business category, which affects when the phase-out begins — a tax professional can confirm your specific classification.