Is the 20% QBI deduction still available for my small business in 2025?

Yes, and it is now permanent. The 20% Qualified Business Income (QBI) deduction under Section 199A was originally set to expire at the end of 2025. The One Big Beautiful Bill Act (OBBBA) made it permanent starting in 2025, which is a major win for small business owners and freelancers.

What the deduction does: If you own a pass-through business (sole proprietorship, S-corp, partnership, or LLC taxed as a pass-through), you can generally deduct up to 20% of your qualified business income from your federal taxable income. This effectively lowers your tax rate on business profits.

The 2025 income thresholds (where phase-out begins):

• Single filers: QBI limitations begin at $197,300 of taxable income
• Married filing jointly: Limitations begin at $394,600

Below these thresholds, the deduction is straightforward: take 20% of your net business income (up to 20% of your total taxable income, excluding capital gains).

Above the thresholds, it gets complicated:

• For most businesses: deduction is limited to the greater of (a) 50% of W-2 wages paid, or (b) 25% of W-2 wages plus 2.5% of qualified property.
• For Specified Service Trades or Businesses (SSTBs): this includes doctors, lawyers, financial advisors, consultants, and similar professionals. The QBI deduction phases out completely once income exceeds the top of the income range (roughly $247,300 single / $494,600 joint for 2025).

Key point for freelancers: If you are a sole proprietor with no employees and no significant business property, the W-2 wage limitation can zero out your QBI deduction once you exceed the income thresholds. One strategy: elect S-corp status and pay yourself a reasonable W-2 salary to preserve the deduction.