7 Things Freelancers Need to Know About QBI Under the OBBBA
Sam's List Editorial | 2026-06-06
7 Things Freelancers Need to Know About QBI Under the OBBBA The QBI deduction just became permanent. If you're self-employed, this matters more than almost any other tax change in recent years. Section 199A — the provision that lets qualifying pass-through business owners deduct up to 20% of qualified business income — was originally set to expire after 2025. The One Big Beautiful Budget Act (OBBBA) made it permanent, effective for tax years beginning after December 31, 2025. Freelancers who were bracing for that sunset can stop planning around it. But permanent doesn't mean simple. The QBI deduction is one of the most misunderstood provisions in the tax code, and the OBBBA introduced a few new wrinkles worth knowing. Here's what actually matters for independent workers. (Verify all OBBBA provisions with your tax advisor at publish time — regulatory guidance continues to develop.) 1. The Deduction Is Now Permanent — Stop Planning Around an Expiration Date The most immediate practical effect: you no longer need to accelerate income into 2025 or restructure your business to front-load deductions before a sunset. Strategies built around "grab income now before QBI goes away" should be unwound or at minimum revisited. The planning landscape for pass-through businesses looks different when the deduction has an indefinite horizon. That affects decisions around S-corp elections, retirement contributions, and income timing. If you made structural changes specifically to prepare for the QBI expiration, talk to your CPA about whether those changes still make sense. 2. A New $400 Minimum Deduction Applies to Anyone With at Least $1,000 in QBI The OBBBA added a floor benefit for lower-income freelancers: if you have at least $1,000 in qualified business income, you get a minimum $400 deduction even if the 20% calculation produces a smaller number. This is new. Under prior law, a freelancer with $3,000 in net self-employment income would have a QBI deduction of $600. Under the OBBBA, they get $400 as a floor — the higher of the two applies. For part-time freelancers, side hustle operators, and early-stage independents, this is a small but real benefit. (Verify this provision and applicable income thresholds with your advisor — regulatory guidance is still emerging.) 3. Higher Phase-Out Thresholds Mean More Specified Service Business Owners Get the Full Deduction The original Section 199A had income thresholds above which owners of "specified service trade or businesses" (SSTBs) — consultants, attorneys, financial advisors, health professionals, and others — began to...
