IRC §199A lets individuals, estates and trusts deduct up to 20 percent of their qualified business income for tax years beginning after December 31, 2017, and before January 1, 2026. The 199A qualified business income deduction, also known as the “pass-though deduction,” is the lesser of:

  • combined qualified business income (discussed below); or
  • 20 percent of the excess (if any) of taxable income over net capital gain.

The examples in this guide illustrate the basic calculation of the deduction and include cautions.