Qualified Business Income (QBI)

Key Information

Qualified Business Income (QBI) refers to a the net gain or loss generated from activities of a qualified trade or business. It applies primarily to owners of "pass-through entities" like sole proprietorships, partnerships, S corporations, and certain trusts.

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Qualified business income (QBI) generally includes deductions for

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• self-employment tax
• self-employed health insurance, and
• qualified retirement plan contributions

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Qualified business income (QBI) generally does not include income, expenses, gains or losses from

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• investment activities
• conducting business outside of the United States or
• non-taxable events

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Tax Impact

The amount of qualified business income (QBI) that is generated by a business is directly related to the QBI deduction that the individual owners are eligible to take against their taxable income.

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References

IRS Qualified Business Income Deduction