The QBI Deduction Is Now Permanent for 2026 — and There’s a New $400 Minimum

One of the most valuable tax breaks for small business owners just went from temporary to permanent. The qualified business income (QBI) deduction — the Section 199A break that lets owners of pass-through businesses deduct a slice of their business profit — was set to expire after 2025. Under the One Big Beautiful Bill Act, it’s now a permanent part of the tax code, and starting in 2026 it comes with a new guaranteed minimum for smaller businesses.

For sole proprietors, freelancers, and anyone running a pass-through business, this is genuinely good news — but only if your records are good enough to claim it correctly.

What Actually Changed

Three things worth knowing:

It’s permanent. The QBI deduction no longer has a sunset date. Owners can plan around it instead of wondering whether Congress will renew it each year.

There’s a new $400 minimum. Beginning in 2026, if you have at least $1,000 of qualified business income from an active trade or business, you’re guaranteed a QBI deduction of at least $400 — even in situations where the usual calculation would have phased it down. Both figures adjust for inflation after 2026.

The phase-in ranges widened. Starting in 2026, the income ranges over which certain limitations phase in rise to $75,000 for single filers and $150,000 for joint filers, up from $50,000 and $100,000. In plain terms, more owners get to keep the full benefit further up the income scale.

Why This Deduction Is Worth Understanding

The QBI deduction can be one of the largest a small business owner gets, because it’s a deduction on top of your ordinary business expense deductions — a percentage of your qualified business income that comes off before you calculate the tax. For a lot of owners it’s the difference of thousands of dollars.

But here’s the catch that trips people up: QBI is built on your net business income, which is your income minus your deductible expenses. You cannot calculate it — or hand your accountant what they need to calculate it — without a clean, complete record of both sides of that equation. Sloppy expense tracking doesn’t just cost you individual write-offs; it distorts the number that drives your QBI deduction too.

The Recordkeeping Angle Nobody Mentions

There’s a subtle tension worth understanding. Every deductible expense you claim lowers your net profit, which slightly lowers your QBI deduction. Some owners hear that and wonder if they should skip deductions to keep QBI high. Don’t — that math never works. A dollar of deduction lowers your taxable income by a full dollar; it only lowers the QBI deduction by a fraction. Claiming every legitimate deduction always comes out ahead.

What actually matters is accuracy. To claim the QBI deduction correctly, you need to know your real net business income, which means knowing your real income and your real, documented deductions. That’s a tracking problem, not a strategy problem — and it’s entirely solvable with a system that captures the numbers as the year goes.

Keep the Records That Make the Deduction Claimable

A permanent QBI deduction and a new $400 floor are only useful if you can substantiate the income and expenses behind them. Our Small Business Tax Deduction Tracker is built to keep exactly those records: an Expense Log with pre-built deductible categories, a Mileage Log at the 2026 rate of 72.5 cents per mile, a Home Office calculator, a Quarterly Taxes tab, and a Dashboard that shows your deductions and estimated tax as you go. That running picture of net business income is the foundation your QBI deduction sits on.

It works in both Excel and Google Sheets, so the moment an expense or payment lands, it’s captured — and by the time your accountant asks for your numbers, they’re already totaled and tax-ready.

The QBI deduction being permanent takes one uncertainty off your plate. Making sure you can actually claim it comes down to the one thing that’s always been in your control: keeping the books clean enough to prove what you earned and what you spent.

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Small Business Tax Deduction Tracker Spreadsheet — Keep the clean income-and-expense records that a QBI deduction depends on. Seven tabs: Dashboard, Expense Log with pre-built deductible categories, Mileage Log at the 2026 IRS rate, Home Office calculator, Quarterly Taxes tracker, Categories, and Instructions — all auto-totaling into a live deductions and estimated-tax view. Compatible with Microsoft Excel and Google Sheets. $17.99 (currently $10.79 with the LAUNCH40 sale). Instant digital download.