Here's what happened and what to do about it.

What the QBI Deduction Is (and Why SSTBs Got the Short End)

The QBI deduction — sometimes called the Section 199A deduction — lets eligible pass-through business owners deduct 20% of their qualified business income from taxable income. It was created in the 2017 Tax Cuts and Jobs Act as a way to give pass-through entity owners a benefit comparable to the corporate tax rate reduction.

For most small businesses, this was a significant benefit. But Congress drew a line around "specified service trades or businesses" (SSTBs) — which includes accounting firms, law firms, consulting firms, financial advisory practices, and medical offices.

SSTB owners faced income phase-outs that reduced or eliminated their QBI deduction at lower thresholds than other business owners. Once your taxable income exceeded the SSTB phase-out range, you were locked out entirely.

For many professional services firm owners in the $100,000–$200,000 taxable income range, this meant watching the QBI deduction disappear as their firm grew — a perverse disincentive built into the code.

What the OBBBA Changed

The One Big Beautiful Bill Act made three changes that directly affect professional services firm owners:

1. Permanent extension. The QBI deduction was previously set to expire after 2025. The OBBBA makes it permanent. No more planning uncertainty around whether it would survive the next Congress.

2. Expanded SSTB phase-out threshold. For married couples filing jointly, the income range where SSTB owners begin losing the deduction increases from $100,000 to $150,000. This isn't a small adjustment. Firm owners who were previously earning too much to claim any deduction may now qualify for a partial or full deduction.

3. New $400 minimum deduction with inflation indexing. The OBBBA adds a $400 floor — meaning owners with modest qualified business income get at least some deduction. And both the phase-out threshold and the minimum deduction are now indexed to inflation, so the numbers don't quietly erode every year.

Who This Actually Affects

The expanded SSTB threshold matters most for firm owners in the $100,000–$150,000 taxable income range — specifically married filers.

If your taxable income was $130,000 (married filing jointly) last year, you were in the phase-out range under the old law and may have received a reduced deduction or none at all. Under the OBBBA, you're below the new phase-out floor and potentially eligible for the full 20% deduction on your qualified business income.

Let's put a number on it. Assume $130,000 in qualified business income and a 24% marginal rate:

• Old law: partial or no QBI deduction — $0 to modest savings
• New law: potentially 20% × $130,000 = $26,000 deduction → $6,240 in tax savings at 24%

For firm owners at the 32% rate, that same $26,000 deduction is worth $8,320.

This is not a rounding error. It's the kind of planning conversation that should be happening now — not in December.

What To Do Before Q2 Estimated Payments

Right now, in the weeks immediately after filing season, is the best time to revisit this. Your numbers are fresh. The new rules are in effect. And Q2 estimated payments are due June 15.

Three actions worth taking in the next 30 days:

1. Confirm your SSTB status and the new threshold impact. Not all professional services firm owners are SSTBs in the technical sense — the classification depends on your entity structure, services rendered, and income mix. Have your accountant run the numbers with the new $150,000 threshold to see whether you now qualify for a full or partial deduction.

2. Review your S-corp compensation structure. For S-corp owners, reasonable compensation affects both your QBI deduction (salary doesn't count as QBI, distributions do) and your overall SSTB calculation. If you set your salary years ago and haven't revisited it, the new threshold may change the optimization math.

3. Surface this for SSTB clients. If you're an accounting or consulting firm with professional services firm owners as clients — attorneys, consultants, other CPAs — this is a proactive planning point to raise before Q2. Many of them don't know this changed. The ones who do will appreciate you flagging it.

Why Now, Not November

Tax planning that happens in October and November is often reactive — you're making moves before year-end with limited room to maneuver. Planning that happens in April and May uses the full year.

The OBBBA QBI changes are effective now. The IRS has already incorporated them into 2026 inflation adjustments. There's no reason to wait.

One short call with your accountant or CPA about whether the new SSTB threshold changes your situation is worth more than most things you'll spend an hour on this week.

This week's action: If you're a professional services firm owner structured as a pass-through entity (S-corp, partnership, or LLC), ask your accountant to confirm whether the OBBBA's expanded $150,000 SSTB phase-out threshold changes your QBI deduction eligibility for 2026. If you are an accountant with SSTB firm-owner clients in the $100K–$150K income range, this is a proactive planning conversation worth initiating now.