An Advisor’s Guide to the QBI Deduction

For many business-owner clients, one of the most significant changes first made by the Tax Cuts and Jobs Act (TCJA), and later made "permanent" by the One, Big, Beautiful Bill Act (OBBBA), was the implementation of the 199A deduction. This deduction, better known as either the Qualified Business Income (QBI) deduction, or the 20% pass-through deduction, has the potential to be a huge tax-saver for certain business-owner/investor clients, but it’s also undoubtedly one of the most complicated provisions advisors regularly run across. QBI planning frequently crosses over into other areas of a client's overall tax and financial plan, and can impact decisions related to filing status, retirement contributions, charitable contributions, insourcing vs. outsourcing decisions, asset location optimization, and more. Accordingly, advisors who learn the ins and outs of the QBI deduction are able to stand out from the competition, attract more business-owner clients, and help those individuals make the most of what is often their single largest ongoing tax benefit.