Taxes
The QBI deduction explained for 1099 contractors
The Qualified Business Income deduction lets self-employed people deduct up to 20% of their business income. Here's how it works in 2026.
By MileTracker · March 27, 2026 · 7 min read
The Qualified Business Income (QBI) deduction is one of the largest, most under-claimed deductions available to 1099 contractors. Here's what it is and who qualifies.
What it is
A 20% deduction on qualified business income for sole proprietors, partners, and S-corp shareholders. So if your net business income is $80,000, you can deduct $16,000 before computing income tax.
Income limits for 2026
The full deduction is available if your taxable income is under approximately $383,900 (MFJ) or $191,950 (single). Above that, the deduction phases out for certain service businesses.
How to claim
Most tax software handles QBI automatically once you've filled out Schedule C. If you do your own taxes, double-check Form 8995.
MileTracker detects every drive in the background, lets you classify business or personal in one tap, and exports an IRS-ready PDF and CSV at tax time. Download MileTracker free on the App Store.