Maximize Your 2025 QBI Deduction: What Business Owners Need to Know

Written By michael bottala

As a business owner, every dollar counts — especially when it comes to taxes. One of the most valuable tools available is the Qualified Business Income (QBI) deduction, which can give you up to a 20% tax break on eligible business profits. But not everyone gets the same benefit, and the rules can get tricky.

For 2025, the QBI deduction starts phasing out once your taxable income reaches $197,300 for single filers and $394,600 for married filing jointly. Go above those numbers, and additional rules kick in. If you’re in a Specified Service Trade or Business (SSTB), like consulting, law, or medical services, the deduction can shrink even faster.

So what income actually counts? QBI includes the ordinary income from your trade or business, think the profits left after expenses from a sole proprietorship, partnership, S-Corp, or LLC. It does not include wages you earn as an employee, capital gains, dividends, interest, or guaranteed payments to partners. If your income is tied directly to running and operating your business, it likely counts toward QBI.

So how do you maximize your benefit? Here are a few smart moves:

  • Manage your taxable income by maxing out retirement contributions, HSAs, or timing income and expenses to stay under the thresholds.

  • Balance W-2 wages and profits. For S-Corp owners, paying yourself the right salary (not too high, not too low) can help preserve more income as QBI.

  • Use property and wages strategically. If your business owns assets or pays employees, those numbers can boost your allowable deduction.

  • Know your business type. Whether you’re an SSTB or not, planning ahead can mean the difference between keeping or losing the 20% write-off.

The QBI deduction is one of the most powerful ways to cut your tax bill, but only if you act before year-end.

Let’s schedule a QBI check-up. We’ll calculate where you stand for 2025, review strategies for your specific business, and build a plan to maximize your deduction. Reach out to Bottala Tax and Advisory at info@bottalacpa.com

michael bottala
Next

Home Office Deduction: A Definitive Guide