All posts

Qualified Business Income (QBI) Deduction: Complete 2026 Guide for Small Business

How the qualified business income (qbi) deduction works, who qualifies, how much you can deduct, and how to document it properly.

April 24, 2026 2 min readby TinSuite Team
tax deductions qbi-deduction write-offs

The qualified business income (qbi) deduction is one of the most valuable — and most misunderstood — deductions available to small business owners. Here's exactly how to use it in 2026.

What it is

Pass-through owners may deduct up to 20% of qualified business income.

The numbers

Sole props, partnerships, S-Corps qualify. Phases out for specified service trades (SSTBs) above income thresholds.

Who qualifies

To claim this deduction, you must:

1. Operate a business (sole prop, LLC, S-Corp, C-Corp, or partnership)

2. Be the correct entity type for this deduction

3. Document properly — the IRS requires contemporaneous records

How to claim it

Sole proprietors

Report on Schedule C of your personal 1040.

Multi-member LLCs / partnerships

Report at the entity level on Form 1065, flows to partners via K-1.

S-Corporations

Report on Form 1120-S, flows to shareholders via K-1.

C-Corporations

Deduct directly on Form 1120.

Documentation requirements

The IRS expects you to keep contemporaneous records — meaning you track it as it happens, not reconstruct at tax time.

Required:

  • Dates and amounts
  • Business purpose (one-sentence description)
  • Receipts for $75 or more
  • For vehicle/mileage: starting/ending odometer, route, purpose
  • For travel: dates, locations, attendees, business discussed

Recommended: keep digital copies in your accounting software. Photograph paper receipts and attach to the transaction.

Common mistakes

1. Missing documentation — a receipt you lose isn't a deduction

2. Mixing personal and business — bright line: business from business account, personal from personal

3. Assuming "if I spent it, it's deductible" — only ordinary and necessary business expenses qualify

4. Not keeping records for 7 years — IRS audit window

5. Rounding up — the IRS notices nice round numbers

How TinSuite handles this

TinSuite is designed to maximize deductions:

  • Receipt OCR — photograph any receipt, data is auto-extracted and filed
  • Mileage tracker — GPS-based auto-tracking with business-purpose tagging
  • Category engine — transactions auto-categorize by deduction type
  • Audit-ready records — every deduction has a receipt + description + date
  • Year-end report — deduction summary ready for you or your CPA

Start your free trial → · See all tax deductions we cover.

Related