The QBI Deduction Professionals Were Told to Forget

The rules just changed for lawyers, doctors, and consultants who assumed they didn't qualify.

This weekend, I was having coffee with a friend of mine, an independent lawyer. Our chat was all about the uncertainty in the economy and ascribing blame or credit to the latest administration. Trying to find a silver lining, I pointed made some of those tax provisions that should benefit professionals like me friend.

He pushed back immediately.

He told me that when the QBI deduction first passed in 2018, he'd actually gotten excited about it. His CPA sat him down and walked him through the math. The verdict: as a high-earning attorney filing jointly, he was over the income limit for his profession. He got nothing. His exact words were something close to "that deduction is only for people who don't work for their money."

The bitterness was still there, seven years later.

So when I mentioned the OBBBA made it permanent, he wasn't impressed. He was busy, tax season was coming, and the last thing he wanted was his CPA scheduling time to explain that the deduction he didn't qualify for had now been made permanent.

I didn't push back in the moment. But I did some research after that coffee. And I think he's wrong — not about what his CPA told him in 2018, but about whether that answer still applies today.

What the Law Actually Changed

The Qualified Business Income deduction — Section 199A — lets owners of pass-through businesses like sole proprietorships, S-corps, and partnerships deduct 20% of their qualified business income. On $400,000 in business income, that's an $80,000 deduction. At a 37% tax rate, that's nearly $30,000 back.

The problem for professionals in law, medicine, consulting, and financial services is that Congress classified them as "Specified Service Trades or Businesses" — SSTBs. The reasoning was straightforward: Congress didn't want high-earning professionals restructuring their businesses just to grab a tax break. So they built in a hard cutoff. Under the original rules, once a married couple filing jointly exceeded about $494,600 in taxable income, an SSTB owner received zero. Not a reduced deduction. Zero.

My friend's CPA gave him the right answer.

The OBBBA changed two things. First, it made the deduction permanent — no more 2025 expiration date. Second, it expanded the phase-out window for joint filers from $100,000 to $150,000 above the threshold. In practical terms, the complete cutoff moved from roughly $494,600 to $544,600. If your taxable income sits in that new band, you now qualify for a partial deduction where you previously qualified for nothing.

Source: IRS Section 199A; One Big Beautiful Bill Act (OBBBA), signed July 4, 2025

But here's what my friend missed — and what most high-earning professionals in his situation are also missing. The expanded window is only part of the story. The bigger change is what permanence does to the math on planning.

Why Permanence Is the Real News

There are roughly 4.7 million independent professionals in the United States earning over $100,000 annually. That number has grown by more than 50% since 2020. A significant share of them — lawyers, physicians, dentists, consultants, financial advisors — fall into SSTB categories and had exactly the same conversation my friend had: their accountant told them they didn't qualify, they filed it away, and they moved on.

Source: MBO Partners State of Independence in America Report, 2020–2024

What those conversations in 2018 all had in common was a rational underlying assumption: even if there were planning strategies to get your income into a qualifying range, why engineer your financial life around a deduction that might disappear next year? The complexity and cost of restructuring weren't worth it for a temporary benefit.

That assumption is now gone.

The deduction is permanent. Which means any planning move that gets you into the eligible range — or deeper into it — pays off not just this year but every year going forward. The one-time cost of restructuring now gets measured against an indefinite stream of tax savings. That's a fundamentally different calculation.

Three Levers Worth Revisiting

If you're a high-earning professional who wrote this off years ago, here are the specific planning moves your CPA should be looking at — not just for this filing season, but as permanent structural decisions.

Retirement contributions. Contributions to a SEP-IRA, Solo 401(k), or cash balance plan reduce your taxable income before the QBI calculation runs. A cash balance plan can shelter $100,000 to $200,000 or more annually for established professionals. If aggressive contributions bring your taxable income below $544,600 as a joint filer, you have a deduction that didn't exist last year. This isn't aggressive tax structuring — it's retirement savings with a material bonus attached. Under a temporary law, that bonus wasn't worth building around. Under a permanent one, it is.

Equipment and expense timing. The OBBBA also permanently restored 100% bonus depreciation for qualifying property acquired after January 19, 2025. That means you can fully expense equipment purchases in the year you make them instead of spreading the deduction across several years. For professionals who own their own practices — a dentist investing in imaging equipment, a physician adding diagnostic tools, a consultant building out a home office — timing those purchases strategically can move your taxable income in ways that interact directly with QBI thresholds. When the depreciation law was temporary, there was no reason to coordinate these decisions. Now there is.

Entity structure and compensation ratios. For S-corp owners, the salary you pay yourself doesn't count as qualified business income — only distributions do. The ratio between the two has always mattered, but until now the deduction's uncertain future made it hard to justify a structural overhaul. If your entity structure or compensation split was set years ago and hasn't been revisited, that's the conversation to have before your CPA closes out 2025 and starts thinking about 2026 planning.

None of these are exotic strategies. They are planning moves that were always available but rarely worth the friction under a temporary provision. What changed isn't the tactics — it's the time horizon they're now measured against.

The Conversation Worth Having Before April

I'm not suggesting you call your accountant and tell them the deduction was made permanent. They know. What's worth asking is whether your 2025 return and your 2026 planning have been updated to reflect that the strategies to reach the threshold now make sense for the first time.

The specific questions: Am I anywhere near the SSTB phase-out range? If not, are there planning moves that could get me there? And given that this is now permanent, does it make sense to revisit how we're structuring contributions, expenses, and compensation?

My friend's CPA gave him the right answer in 2018. The conversation that produces the right answer in 2026 is a different one — not because the rules got simpler, but because permanence changed what's worth doing about them.

That's a conversation worth having, even if you're busy.

Especially if you're busy.

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