The Qualified Business Income (QBI) deduction is a special tax break for people who make money from their own business, such as sole proprietors, partners, or S corporation shareholders. If you qualify, it lets you deduct up to 20% of your business profits from your taxable income on your personal tax return, so you pay less tax overall.
Not all business income is eligible (for example, income from being an employee doesn’t count), and the rules are different if your total income is above certain thresholds or if your business is in a specified service field, like law or medicine. But for many small business owners, QBI can mean big tax savings each year—just for running your business and reporting the profit.
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