Small Business Tax Deductions — QBI + R&E + Bonus Depreciation + §179 + §163(j) (2026)

Quick summary

The Small Business Deduction Stack Calculator models the FIVE major federal tax deductions OBBBA made permanent for 2026: §199A QBI 20% pass-through deduction, §174A immediate domestic R&E expensing, §168(k) 100% bonus depreciation, §179 expensing up to $1.25M, and §163(j) interest deduction at 30% EBITDA.

Together they can save a profitable small business $50,000-$300,000+ per year versus the pre-2026 regime. The calculator handles the 2026 OBBBA-expanded QBI phase-in ($201,750 single / $403,500 MFJ → $276,750/$553,500), the SSTB exclusion (medicine, law, finance, consulting), the W-2 wages and UBIA limits above the threshold, and the $400 minimum QBI if you materially participate.

Use it before year-end to optimize equipment purchases (§179), R&E timing (§174A), debt structure (§163(j)), and salary/bonus levels (QBI threshold management).

Filing status

Specified Service Trade (SSTB)?

Net business income (before QBI)

Total taxable income (before QBI)

W-2 wages paid by business

Relevant above $241,950/$483,900 threshold

UBIA of qualified property

Unadjusted Basis Immediately After acquisition

Domestic R&E expenses (§174A)

100% deductible (OBBBA permanent)

100% bonus depreciation property

§179 equipment purchases

2026 limit ~$1.25M; phaseout ~$3.13M

Business interest expense

Adjusted Taxable Income (~EBITDA, for §163(j))

Interest deduction limited to 30% of ATI (OBBBA permanent)

Share with friends

How to use

1 Enter net business income (Schedule C net profit, or K-1 ordinary income for S-corp/partnership).
2 Enter your filing status, total taxable income (before QBI), and W-2 wages paid by the business if above the QBI threshold.
3 Enter UBIA (Unadjusted Basis Immediately After acquisition) of business property — used for the wage/UBIA test above the QBI phase-in.
4 Enter §174A domestic R&E expenses, §179 equipment purchases, §168(k) bonus-depreciable property, business interest expense, and ATI for §163(j).
5 Toggle SSTB if your business is in medicine, law, accounting, finance, consulting, athletics, or performing arts. Click Calculate to see each deduction, total stack, and tax savings at 22%/32%/37% brackets.

2026 OBBBA Permanent — 5 Major Business Deductions

Deduction	2026 Detail	OBBBA Status
§199A QBI	20% of pass-through income	Permanent + $400 minimum + expanded phase-in
§174A R&E	100% domestic R&E expensing	Permanent (foreign still 15-yr)
§168(k) Bonus Depreciation	100% post-1/19/2025 placement	Permanent (was phasing out)
§179 Expensing	$1,250,000 immediate; phaseout begins $3,130,000	Inflation-indexed
§163(j) Interest Limit	30% of ATI (EBITDA-based)	Permanent EBITDA — better for capital-intensive

2026 §199A QBI — Phase-In Thresholds

Filing Status	Phase-In Begins	Phase-Out Complete	Phase-In Range
Single / HoH	$201,750	$276,750	$75,000
Married Filing Jointly	$403,500	$553,500	$150,000
Married Filing Separately	$201,750	$276,750	$75,000

SSTB — Specified Service Trade or Business

Above the QBI phase-in, SSTBs (Specified Service Trades or Businesses) lose the deduction entirely. Industries:

SSTB (loses QBI above threshold)	Non-SSTB (keeps QBI)
Health (doctors, dentists, vets)	Manufacturing
Law	Construction
Accounting	Real estate (brokers, agents may be SSTB)
Actuarial science	Software (mostly non-SSTB)
Performing arts	Engineering / Architecture
Consulting	Retail / Wholesale
Athletics	Restaurants / Hospitality
Financial services	Farming / Agriculture
Brokerage services	Marketing / Advertising
Investing / Investment management	Most service businesses NOT in the list

Equipment Stacking — §179 + §168(k) Bonus Depreciation

Both §179 and bonus depreciation give immediate 100% expensing. Order matters:

Step	Detail
1. §179 First	Up to $1,250,000 (2026); phaseout above $3,130,000
2. §168(k) Bonus Depreciation	Remainder at 100% post-Jan 19, 2025 (OBBBA permanent)
3. MACRS Regular Depreciation	Anything left over depreciated normally

§174A R&E Expensing — Major OBBBA Win

Pre-2022, all R&E was immediately deductible. TCJA forced 5-year amortization starting 2022 — devastating to tech and biotech. OBBBA restored immediate expensing for domestic R&E starting 2025. Foreign R&E still amortized over 15 years. This alone saves a tech startup with $1M of R&D ~$200K-$370K in current-year tax.

FAQ

Q What is the QBI deduction in 2026?

A 20% deduction for qualified business income from sole props, partnerships, S-corps, and LLCs (§199A). OBBBA made it PERMANENT and added a $400 minimum if QBI ≥ $1,000 + material participation. 2026 phase-in: $201,750 single / $403,500 MFJ; phase-out complete at $276,750 / $553,500.

Q What is §174A R&E expensing?

Section 174A (added by OBBBA) restored immediate 100% deduction for DOMESTIC research & experimentation expenses starting 2025. Pre-OBBBA (2022-2024), R&E had to be amortized over 5 years — devastating to tech. Foreign R&E still must be amortized over 15 years.

Q How much can I deduct via §179 in 2026?

$1,250,000 maximum deduction. Phaseout begins at $3,130,000 of qualifying purchases (dollar-for-dollar reduction). Combined with 100% bonus depreciation under §168(k), most equipment can be fully expensed in year of purchase.

Q What is 100% bonus depreciation?

§168(k) lets you immediately deduct 100% of qualifying property cost in year of purchase — no useful life amortization. OBBBA restored this permanently for property placed in service after January 19, 2025. Was phasing out (40% in 2025) before OBBBA. Major win for capital-intensive businesses.

Q What is §163(j) and how does OBBBA help?

IRC §163(j) limits business interest deduction to 30% of Adjusted Taxable Income. Pre-OBBBA, ATI used EBIT (excluded depreciation/amortization). OBBBA permanently made ATI EBITDA-based — adds back depreciation/amortization. Major improvement for capital-intensive industries (real estate, manufacturing, infrastructure).

Q What is an SSTB?

Specified Service Trade or Business — health, law, accounting, actuarial, performing arts, consulting, athletics, financial services, brokerage, investment management. Above the §199A phase-in threshold, SSTBs LOSE the QBI deduction. Below threshold, SSTBs get full QBI like any other business.

Q Should I take §179 or bonus depreciation?

Both give 100% immediate expense. Use §179 FIRST up to $1.25M; bonus depreciation handles the remainder. Difference: §179 cannot create or increase a net operating loss (limited to taxable income), while bonus depreciation CAN create an NOL. Choose strategically based on tax planning needs.

Q How much can the small business deduction stack save me?

Variable but substantial. A profitable $300K Schedule C business at 32% bracket: ~$60,000 QBI deduction → $19,200 tax savings. Plus §174A R&E + §179 + bonus depreciation can multiply this 2-5×. Mid-size businesses commonly save $50K-$300K+/yr via stacking these deductions.