Form 8995: Qualified Business Income Deduction (2026)
Claim the 20% deduction on your pass-through and self-employment income.
Form 8995 is the simplified way to claim the qualified business income (QBI) deduction — up to 20% of your net self-employment, sole-proprietor, S-corp, or partnership income. Use Form 8995 when your taxable income is under the threshold; above it, the phase-outs and Form 8995-A apply. It's one of the biggest breaks for the self-employed.
Who files Form 8995
- Sole proprietors and single-member LLCs with Schedule C profit.
- S-corp shareholders and partners with pass-through income.
- Certain rental-real-estate and REIT/PTP investors.
- Anyone eligible whose taxable income is under the annual threshold uses the short Form 8995.
How the QBI deduction works
The QBI deduction lets eligible business owners deduct up to 20% of their qualified business income, on top of the standard or itemized deduction. It's an income-tax deduction only — it doesn't reduce self-employment tax. For many freelancers and small-business owners it's worth thousands of dollars a year.
Below the taxable-income threshold, the math is simple and you use Form 8995: 20% of QBI, limited to 20% of your taxable income minus capital gains. Above the threshold, specified-service businesses phase out and wage/property limits kick in on the longer Form 8995-A.
Frequently asked questions
Who qualifies for the QBI deduction?
Owners of pass-through businesses — sole proprietorships, partnerships, S-corps, and some rentals. Below the income threshold, nearly all qualify; above it, service businesses (law, health, consulting, etc.) phase out.
Does QBI reduce self-employment tax?
No. The QBI deduction only reduces income tax. Your self-employment tax on Schedule SE is unaffected.
What's the difference between Form 8995 and 8995-A?
Form 8995 is the short version for taxpayers under the taxable-income threshold. Form 8995-A is the detailed version with the wage/property limits and service-business phase-outs for higher earners.
Sources & verification
Last reviewed July 12, 2026.