QBI Deduction 2026: OBBBA Makes 20% Permanent for Gig Workers
Last updated: June 2026 · By Ethan Blake · ~5 min read · 1,400 words
2026 Tax Summary — QBI Deduction OBBBA 2026
The Qualified Business Income (QBI) deduction is now permanent under OBBBA 2026 — no more expiration risk. Gig workers filing Schedule C can deduct up to 20% of net profit from federal taxable income. On $35,000 net profit, that is a $7,000 deduction.
The QBI deduction was originally set to expire in 2025. OBBBA 2026 made it permanent. Every gig worker filing Schedule C — DoorDash, Uber, Instacart, Amazon Flex, Etsy — qualifies for up to 20% of net profit as a deduction from federal taxable income.
OBBBA 2026 PERMANENTUp to 20% of net profitSchedule C filersUpdated June 2026
OBBBA 2026 — QBI Now Permanent The QBI deduction was previously set to expire after 2025. OBBBA 2026 eliminated the expiration — gig workers can count on this deduction permanently when planning their business structure.
Tax Deductions for Gig Workers Using the QBI Deduction 2026
QBI DeductionUp to 20%
Deduct up to 20% of net Schedule C profit from federal taxable income. Made permanent by OBBBA 2026.
Example: $35K profit$7,000 saved
20% of $35,000 net profit = $7,000 QBI deduction. Federal tax saving at 22% rate = $1,540.
Mileage$0.725/mile
Stack QBI deduction with mileage: 10,000 miles ($7,250) + QBI ($7,000) = $14,250 total deductions.
SE Tax Deduction50% of SE tax
Deduct half SE tax first — this reduces net profit, which reduces the QBI deduction base.
Tips Exclusion StackUp to $25,000
QBI applies to net profit after the tips exclusion is applied — stack both for maximum savings.
Standard Deduction$16,100 single
QBI is an above-the-line deduction — it reduces taxable income even if you take standard deduction.
Health Insurance100%
Self-employed health insurance reduces net profit, which also reduces QBI base — plan accordingly.
Business Expenses100%
All Schedule C expenses reduce net profit first — QBI is 20% of the remaining net profit.
Key Takeaways
- QBI deduction is now permanent under OBBBA 2026 — no expiration date
- Up to 20% of net Schedule C profit excluded from federal taxable income
- On $35,000 net profit: $7,000 QBI deduction saves ~$1,540 at the 22% tax rate
- Income phase-out begins at $197,300 (single) for specified service trades
- Stack with mileage ($0.725/mile), tips exclusion ($25,000), and standard deduction ($16,100)
- QBI is an above-the-line deduction — works with standard or itemized deductions
Frequently Asked Questions
Do gig workers qualify for the QBI deduction?
Yes. Any gig worker filing Schedule C with net profit qualifies for the QBI deduction. Uber drivers, DoorDash drivers, Instacart shoppers, Etsy sellers, and Upwork freelancers all qualify. The deduction is 20% of net profit.
How is the QBI deduction calculated for Schedule C filers?
Calculate net profit on Schedule C (gross income minus all deductions). Deduct 50% of SE tax and self-employed health insurance. The QBI deduction is 20% of the resulting qualified business income, capped at 20% of taxable income minus net capital gains.
Is there an income limit for the QBI deduction?
For most gig workers, no practical limit applies. Phase-outs begin at $197,300 (single) and $394,600 (MFJ) for specified service trades. Most delivery and rideshare work is not a specified service trade and is not subject to the phase-out.
Did OBBBA 2026 change the QBI deduction rules?
OBBBA 2026 made the deduction permanent (previously set to expire after 2025). The rate remains 20% of qualified business income. The income thresholds were also adjusted for inflation.
How do I claim the QBI deduction?
Use IRS Form 8995 (simplified) or Form 8995-A (complex) attached to your Form 1040. Tax software handles this automatically. The deduction flows from Schedule C net profit to reduce your federal taxable income.
About the Author
EB
Ethan Blake
Small Business Tax & Compliance Expert
Writes about 1099 tax deductions, self-employment tax, and IRS rules for independent contractors and freelancers.