8995: Qualified Business Income Deduction Simplified Computation (2025)
Federal · IRS · Used for tax years 2025
Form 8995 calculates the qualified business income deduction using a simplified computation. It reports qualified business income or losses, qualified real estate investment trust (REIT) dividends, publicly traded partnership income or losses, and loss carryforwards, and applies
Who files this form
Individuals and eligible estates and trusts use Form 8995 to figure the qualified business income (QBI) deduction when all of these apply:
- They have QBI, qualified real estate investment trust (REIT) dividends, or qualified publicly traded partnership (PTP) income or loss.
- Their 2025 taxable income before the QBI deduction is no more than $394,600 if married filing jointly, or $197,300 for all other returns.
- They are not patrons in a specified agricultural or horticultural cooperative.
If you do not meet these conditions, the instructions direct you to use Form 8995-A to figure the deduction.
S corporations, partnerships, and cooperatives cannot claim the deduction themselves. They must provide information to their shareholders, partners, or patrons so eligible recipients can figure their deductions.
What you'll need
Have the following information ready, as applicable:
- Your tax return: You need your name, taxpayer identification number, taxable income before the QBI deduction, qualified dividends, and net capital gain. You may also need Schedule D.
- Business information: Each trade, business, or aggregation name, its taxpayer identification number where required, and its net QBI or loss.
- Schedule K-1 information and attachments: These provide information from partnerships, S corporations, estates, or trusts. Items reported there are not automatically QBI.
- Form 1099-DIV: Qualified REIT dividends are reported on line 5.
- Loss records: Gather prior-year qualified business and REIT/PTP loss carryforwards, plus records of suspended losses and deductions. The instructions include a QBI Loss Tracking Worksheet to keep for your records.
If you aggregated trades or businesses, attach Schedule B (Form 8995-A) or a similar schedule. If you have more than five trades or businesses, attach a statement listing the additional businesses' names and taxpayer identification numbers, and include their income or loss in line 2.
How to file
Attach Form 8995 to your tax return. Enter the deduction from line 15 on the applicable line of that return. For Form 1040, 1040-SR, or 1040-NR, enter it on line 13a.
For an electing small business trust (ESBT), attach the Form 8995 used for the S portion as a PDF to the ESBT tax worksheet filed with Form 1041. Write “ESBT” in the top margin to show that it applies only to the S portion.
The supplied text does not give a mailing address or general e-file instructions. Instructions and the latest information are available at www.irs.gov/Form8995.
Common mistakes
- Assuming reported income automatically counts as QBI. The instructions warn that Schedule C net income and Schedule K-1 items are not automatically included. Check whether each item qualifies.
- Forgetting an aggregation attachment. If you aggregated trades or businesses, the instructions remind you to attach Schedule B (Form 8995-A) or a similar schedule.
- Failing to track suspended losses separately. The instructions caution that losses and deductions suspended under other tax provisions must be tracked separately to determine the amount that can later count as negative QBI.
- Using positive numbers for losses on the tracking worksheet. The worksheet instructions say to enter all losses as negative numbers.
Questions people ask
How much is the QBI deduction?
It can be up to 20% of net QBI, plus 20% of qualified REIT dividends and qualified PTP income. The total is limited to 20% of taxable income before the QBI deduction, after subtracting net capital gain increased by qualified dividends. Form 8995, line 15, uses the smaller of the calculated deduction and the income limitation.
Do wages from my job count as QBI?
Generally, no. Form W-2, box 1 wages are not QBI, except for amounts reported when “Statutory Employee” is checked in box 13.
What if my business has a net loss?
If you have a qualified business net loss for the year, you do not qualify for the deduction unless you have qualified REIT dividends or qualified PTP income. The business loss carries forward to the next year and offsets QBI in later years, even if the business no longer exists.
Can a specified service business qualify?
Yes. For 2025, a specified service trade or business is treated as a qualified trade or business if taxable income before the QBI deduction is no more than $394,600 for married filing jointly or $197,300 for all other returns.