New Law Makes QBI Deduction Permanent for Qualified Business Owners

Tax Planning is one of the most important components of operating a successful business, and maximizing the Qualified Business Income (QBI) deduction is a key element in that planning.  The QBI deduction enables eligible business owners to reduce their taxable income by up to 20 percent of their qualified business income, providing a valuable opportunity for tax savings. With the signing of the One Big Beautiful Bill Act (OBBB) on July 4, 2025, the QBI deduction that was set to sunset at the end of 2025 is now permanent. QBI becoming permanent provides an opportunity for sole proprietors and pass through entities to be proactive in their planning to optimize the tax savings for the individual owners.

For those in fields like consulting, legal services, and finance known as specified service trade or business (SSTB)—where deduction limits were phased out at relatively modest income levels—there is more room to plan. The thresholds have widened, the phaseouts have shifted upward, and new minimum deductions now apply for lower levels of qualified business income.

What this means is that more people stand to benefit from the QBI deduction with proactive planning. Taking advantage of the QBI deduction depends on timing, structure, and many other factors.

With permanent rules in place and more generous thresholds, this is a good time to be proactive with your tax planning and have everything organized heading towards year end. Strategic adjustments made during the year may help you maximize the QBI deduction.

It is important to note that the IRS has yet to issue detailed guidance on these changes. Business owners should monitor forthcoming regulations closely and consult with their tax advisors to stay aligned with evolving interpretations.

How We Help

AAFCPAs offers a comprehensive approach to business tax strategy that combines deep technical knowledge with proactive strategies tailored to your company’s goals. We focus on helping pass-through business owners optimize deductions like the QBI while managing compliance across federal, state, and local levels. Our team monitors evolving tax regulations to ensure your tax position stays current and advantageous.

By coordinating with your internal teams and advisors, we develop personalized tax strategies designed to preserve cash flow and maximize financial outcomes. Whether you are planning year-end tax moves or evaluating entity structure, AAFCPAs provides clear guidance to help you make informed decisions that align with your business objectives.

These insights were contributed by Matthew Lougee, CPA, MSA, Tax Director.

Questions? Reach out to our author directly or your AAFCPAs partner.

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