QBI Deduction 2026: OBBBA Makes 20% Permanent for Gig Workers
Last updated: June 2026 · By the 1099Deductions Team · ~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
1099Deductions.com
Free tax deduction guides for 1099 workers
Estimates are based on current IRS guidance. This is not tax advice — consult a licensed professional for your situation.