If a successful professional service practice is managed—perhaps a growing medical office near the Hylton Performing Arts Center, or a busy law firm serving clients from Historic Downtown Manassas—it is known that success often brings complexity. Owners work hard to build their businesses, and when it comes to taxes, certainty is required, not guesswork.

The Qualified Business Income (QBI) Deduction, or Section 199A, offers an opportunity to deduct up to 20% of net business income. However, for high-earning service providers—known by the IRS as Specified Service Trade or Businesses (SSTBs)—this deduction is a moving target. Income limits, W-2 thresholds, and confusing phase-outs can feel like a maze built specifically to exclude thriving Manassas professionals.

The core difficulty often faced by these businesses—the uncertainty surrounding the deduction’s sunset—has been substantially reduced. While prior law set the QBI deduction for expiration after 2025, recent legislative discussions—such as the proposed One Big Beautiful Bill Act (OBBBA)—signal strong congressional intent to make this valuable deduction permanent, providing greater confidence and stability for planning purposes.

Brown, Mobley & Way PC specializes in proactive, advanced QBI planning for the Manassas service sector. The firm’s focus is on structuring businesses, analyzing W-2 wages, and forecasting taxable income to legally secure the maximum deduction allowed, turning complex tax code into real, measurable savings.

H2: What is the Qualified Business Income (QBI) Deduction?

Introduced under the 2017 Tax Cuts and Jobs Act (TCJA), the QBI deduction was designed to create tax parity between C corporations and pass-through entities. It allows eligible owners to deduct up to 20% of qualified business income—whether they itemize or claim the standard deduction.

Who is eligible for the 20% deduction?

Eligibility generally applies to businesses structured as pass-through entities, which include sole proprietorships (Schedule C filers), Limited Liability Companies (LLCs), Partnerships, and S Corporations. Certain trusts and estates may also qualify. Income earned through a C corporation or by providing services as an employee is specifically excluded from eligibility.

The Critical Difference: QBI vs. Taxable Income Limits

While the deduction equals 20% of QBI, the total deduction is strictly limited to 20% of the taxpayer’s taxable income (calculated before the QBI deduction and minus net capital gain). Furthermore, QBI itself is defined as the net amount of income, gains, deductions and losses, excluding specific items like investment income, W-2 compensation paid to S corporation owners, and guaranteed payments to partners. This differentiation means that success in one area of the business does not guarantee the deduction if total taxable income or entity structure is not optimized.

The SSTB Challenge: Navigating Income Limits and Phase-Outs

The primary challenge for successful Manassas service professionals is the definition of a Specified Service Trade or Business (SSTB). An SSTB is defined as any trade or business that performs services in fields such as accounting, law, health (medical practices), consulting, financial services, brokerage services, actuarial science, performing arts, and athletics. These specific service fields face strict income limitations that restrict or eliminate the deduction as income rises.

Current QBI Phase-Out Thresholds (2025/2026 Planning)

Tax planning must be proactive, utilizing the specific income thresholds established by the IRS, which are indexed annually for inflation. Exceeding the lower threshold triggers a complex phase-in of limitations based on W-2 wages and the unadjusted basis of qualified property.

The limitations for SSTBs begin when the taxpayer’s total taxable income (before the QBI deduction) enters the phase-in range.

SSTB QBI Deduction Income Phase-In Ranges (2025 Tax Year)

Data based on 2025 indexed figures for Section 199A limitations.

When the QBI Deduction Disappears: The Upper Threshold

If a taxpayer’s taxable income exceeds the upper threshold (e.g., $247,300 for single filers or $494,600 for joint filers in 2025), they will not be permitted to take any QBI deduction if the business is classified as an SSTB. This zero-deduction status, for income just $50,000 above the lower limit in some cases, highlights why proactive planning before reaching this tier is critical for Manassas professionals.

Advanced Strategies to Maximize QBI for Your Manassas Practice

For high-income service professionals, maximizing QBI benefits requires aligning entity structure, compensation, and timing. Here’s how advanced planning makes it possible.

Maximizing the QBI deduction for an SSTB requires moving beyond simple income reduction and engaging in structural and compensation planning.

Entity Structure and the W-2 Wage Limit

Once taxable income exceeds the lower threshold, the QBI deduction calculation is restricted to the lesser of 20% of QBI or the W-2 wage/UBIA limit.This limit is calculated as the greater of:

1. 50% of the W-2 wages paid by the business, or
2. 25% of the W-2 wages paid plus 2.5% of the unadjusted basis immediately after acquisition (UBIA) of qualified property.

For service businesses—which often have high payroll but limited depreciable property—the W-2 wage component is often the determining factor. This creates a powerful planning tool, particularly for S corporations. By strategically adjusting the reasonable compensation paid to S corporation owners, it is possible to increase the W-2 base used in the calculation, which can result in maximizing the deduction within the phase-out range.

Leveraging Qualified Property (UBIA)

While service businesses typically lack significant real property, some practices, such as specialized medical or dental offices with expensive equipment, may benefit from the UBIA component of the limitation. UBIA refers to the original purchase cost of depreciable assets. By ensuring all qualified property is properly recorded and accounted for, CPAs can maximize the second part of the limitation, potentially securing a higher deduction than relying solely on W-2 wages.

The Importance of Proactive Tax Planning (Not Just Preparation)

The complexity of QBI rules, the shifting income thresholds, and the interaction with entity structure mean that success is not guaranteed by basic tax preparation. Proactive strategic tax planning allows the firm to forecast income and apply the necessary adjustments to compensation or capital expenditures throughout the year, ensuring the client is positioned optimally before year-end. For Manassas business owners, this strategic foresight is key to turning potential tax losses into actionable capital.

Why Manassas Service Professionals Choose Brown, Mobley & Way PC

The firm provides expert QBI guidance to the professional community that defines Prince William County, specializing in clarity and strategic execution.

Brown, Mobley & Way PC has provided expert tax strategy to businesses throughout Manassas, Gainesville, and the surrounding areas of Northern Virginia for years. The team understands the local economy, from the entrepreneurs near the Manassas Train Station to the thriving medical practices along Route 234. The firm’s comprehensive QBI Optimization Review is designed to efficiently analyze all required components.

Step-by-Step QBI Optimization Overview

1. Discovery & Income Analysis: The process begins with a review of current and projected taxable income, precisely identifying the client’s SSTB status (e.g., medical, legal, or consulting).
2. Threshold Modeling: Advanced financial modeling is utilized to map income against the current IRS phase-out limits, including the increased phase-in ranges beginning in 2026, which provides stability for long-term planning.
3. W-2 and UBIA Review: A thorough evaluation of W-2 wage payments and unadjusted basis immediately after acquisition (UBIA) of qualified property is conducted to identify optimization opportunities.
4. Strategic Recommendations: Clients receive a clear, actionable plan—whether it involves adjusting owner compensation or making a qualified capital investment—to secure the highest possible deduction.
5. Form 8995 Filing: The necessary IRS Form 8995 is meticulously prepared and filed to accurately claim the qualified business income deduction.

Ready to Secure Your 20% QBI Tax Break?

The potential tax savings from maximizing the QBI deduction are too significant for service professionals to leave to chance. Relying on generic advice or automated tax software often means missing out on thousands of dollars, particularly when navigating the specific requirements for high-income SSTBs.

Schedule your complimentary QBI Optimization Review today and discover how much of your hard-earned income you can legally keep.

Call Brown, Mobley & Way PC at 703-361-9068. The firm is available Monday through Friday to serve Manassas’s professional service owners seeking certainty and substantial savings.