How To Calculate the QBI Deduction

The QBI deduction is a tax benefit for self-employed and small-business owners who have pass-through income. It allows them to deduct up to 20% of their qualified business income (QBI) from their taxable income. QBI is the net profit of a business, excluding certain items such as capital gains, dividends, interest income, and wages.

To calculate the QBI deduction in Excel, you need to follow these steps:

  1. Enter your total taxable income (including your QBI) in cell A1.
  2. Enter your QBI in cell A2.
  3. Enter the QBI deduction threshold for your filing status in cell A3. For 2022, the threshold is $170,050 for single filers and $340,100 for joint filers. For 2023, the threshold is $182,100 for single filers and $364,200 for joint filers.
  4. Enter the formula =IF(A1<=A3,A2*0.2,0) in cell A4. This formula will calculate your QBI deduction if your total taxable income is below or equal to the threshold. If your total taxable income is above the threshold, your QBI deduction may be limited or phased out depending on the type of your business and other factors.
  5. Format cell A4 as currency with two decimal places.

qbi deduction calculations in excel

The result in cell A4 is your QBI deduction amount. You can use this amount to reduce your taxable income on your tax return.

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