What this line means
Your taxable income from Form 1040 line 15 before subtracting the QBI deduction. This is your total income minus adjustments, minus the standard or itemized deduction — but without the QBI deduction factored in. It is the starting point for calculating the income limitation that caps your Section 199A deduction. 1
Does this apply to you?
- You are completing Form 8995 and need to determine whether the income limitation reduces your deduction
- You already calculated your taxable income on Form 1040 line 15 (before the QBI deduction)
- You want to check whether 20% of your taxable income is less than 20% of your QBI
Easy to overlook
This amount determines whether you can use the simplified Form 8995 You can only use Form 8995 (simplified) if your taxable income before the QBI deduction is at or below $197,300 (single) or $394,600 (married filing jointly) for 2025. If your income exceeds these thresholds, you must use Form 8995-A instead, which applies additional W-2 wage and property limitations. 2 IRS Publication 535 — Qualified Business Income Deduction
The QBI deduction is not included in the income on this line This is a circular calculation that the IRS resolves by defining taxable income “before” the QBI deduction. Do not subtract any estimated QBI deduction from line 15 before entering it here. Use the Form 1040 line 15 amount as if the QBI deduction did not exist. 3 IRS Form 8995 Instructions — Line 10
Watch out for this
Using adjusted gross income instead of taxable income. Line 10 uses taxable income from Form 1040 line 15, which is after subtracting the standard or itemized deduction. AGI (line 11a of Form 1040) is a higher number. Using AGI makes the income limitation look more generous than it actually is, which does not change the final deduction but indicates you are reading the wrong line.
Footnotes
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IRS Form 8995 Instructions, Line 10. https://www.irs.gov/instructions/i8995 ↩
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IRS Publication 535, Business Expenses, Chapter 12 — Taxable Income Thresholds. https://www.irs.gov/pub/irs-pdf/p535.pdf ↩
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IRS Form 8995 Instructions, Line 10 — Taxable Income Before QBI Deduction. https://www.irs.gov/instructions/i8995 ↩