IRS Instruction 8995-A – IRS Forms, Instructions, Pubs 2026 – The Qualified Business Income (QBI) deduction under Section 199A lets eligible individuals, estates, and trusts deduct up to 20% of qualified business income from pass-through entities (sole proprietorships, partnerships, S corporations), plus qualified REIT dividends and PTP income. For tax year 2025, if your taxable income before the deduction exceeds $197,300 ($394,600 if married filing jointly), or if you are a patron of a specified agricultural or horticultural cooperative, you must use Form 8995-A (and its instructions) instead of the simpler Form 8995.
This article summarizes the official IRS Instructions for Form 8995-A for 2025, explains who files it, key calculations, limitations, and more.
Download the Official IRS Instructions for Form 8995-A
- Instructions PDF: https://www.irs.gov/pub/irs-pdf/i8995a.pdf (2025 edition)
- Form 8995-A PDF: https://www.irs.gov/pub/irs-pdf/f8995a.pdf
Always use the latest versions from IRS.gov and consult a tax professional for your specific situation.
Who Must Use Form 8995-A?
Use Form 8995-A if any of these apply:
- Your 2025 taxable income (before QBI deduction) is more than $197,300 (single, head of household, etc.) or more than $394,600 (married filing jointly).
- You are a patron of a specified agricultural or horticultural cooperative.
- You need to apply complex rules such as:
- Specified Service Trade or Business (SSTB) phase-outs
- Business aggregations
- Loss netting and carryforwards
- Wage/UBIA limitations
If your income is at or below the thresholds and you have no cooperative patronage, use the simpler Form 8995.
2025 Income Thresholds & Phase-In Ranges
| Filing Status | Threshold (use 8995-A above this) | Full Phase-In Range (SSTB & wage/UBIA limits fully apply above this) |
|---|---|---|
| Single / HoH / MFS | $197,300 | $247,300 |
| Married Filing Jointly | $394,600 | $494,600 |
Between the threshold and full phase-in, SSTB income and the wage/UBIA limitation are phased in.
Key Components of the QBI Deduction
The deduction is the lesser of:
- Your QBI component + REIT/PTP component, or
- 20% of your taxable income (before QBI deduction) minus net capital gain (plus any qualified dividends).
QBI Component
- Generally 20% of qualified business income from U.S. trades or businesses.
- W-2 wage & UBIA limitation (applies above threshold unless in phase-in range):
- Greater of: 50% of allocable W-2 wages, or
- 25% of W-2 wages + 2.5% of unadjusted basis immediately after acquisition (UBIA) of qualified property.
- SSTB phase-out: Income from specified service trades or businesses (health, law, accounting, consulting, etc.) is fully excluded above the phase-in range.
- Loss netting (Schedule C): Negative QBI from any business offsets positive QBI proportionally; excess net loss carries forward.
- Patron reduction (Schedule D): Special rules for cooperative patrons.
REIT/PTP Component
20% of qualified REIT dividends and qualified PTP income (subject to SSTB limitations).
Step-by-Step Overview of Form 8995-A
- Part I – List each trade/business/aggregation (attach extra sheets if >3).
- Complete required schedules first:
- Schedule A – SSTB determination & applicable percentage.
- Schedule B – Optional aggregation of multiple businesses.
- Schedule C – Loss netting & carryforward.
- Schedule D – Cooperative patron reduction.
- Part II – Calculate adjusted QBI for each business (20% × QBI, then apply wage/UBIA limit or phased-in reduction).
- Part III – Phased-in reduction (only if in phase-in range and wage/UBIA limit applies).
- Part IV – Combine QBI component + REIT/PTP component and apply overall taxable income limitation.
What’s New for 2025?
- Certain tip income can now be excluded when figuring QBI (see instructions for details).
- Thresholds adjusted for inflation (increased from 2024 levels).
- The deduction remains available with no sunset in 2025 (per current law).
Tips & Common Pitfalls
- Track suspended losses carefully (they may become qualified in future years).
- Rental real estate can qualify under the safe harbor in Rev. Proc. 2019-38.
- Aggregations must be consistent year to year.
- S corporations and partnerships report QBI info on Schedule K-1; you combine it on your Form 8995-A.
- The deduction does not reduce self-employment tax or net investment income tax.
Need Help?
- Official IRS page: Instructions for Form 8995-A
- QBI Flowchart in the instructions (highly recommended).
- Tax software (TurboTax, H&R Block, etc.) usually handles this automatically.
Download the instructions here: https://www.irs.gov/pub/irs-pdf/i8995a.pdf
This guide is based on the official 2025 IRS Instructions for Form 8995-A. Tax rules can change; always verify with the latest IRS publications or a qualified tax advisor.