How to boost your 199A deduction and lower your taxes.
I was looking at my numbers the other day and realized how much the Section 199A deduction can quietly change the game for small business owners. You may remember that the Tax Cuts and Jobs Act gave pass-through businesses a 20 percent deduction on qualified business income. For many, it was a do-nothing, automatic deduction. You didn’t have to plan, adjust your books, or hire anyone. It just appeared on your Form 1040, and you got the benefit.
Then the One Big Beautiful Bill Act made this deduction permanent. No more worrying about expiration. But permanent doesn’t mean static. How you plan can still increase the deduction you take, or sometimes reduce it if you’re not careful.
Here’s an example I like to think about. Imagine your qualified business income and taxable income are $150,000. Twenty percent of that is $30,000. You claim $30,000 on your return. Easy.
Now let’s say you buy $25,000 of new equipment and expense it. Suddenly your QBI drops to $125,000. Your deduction is now $25,000. Still good, but smaller than before. That’s the difference that careful planning can make.
If your taxable income is above $197,300 for single filers or $394,600 for joint filers, things get more complicated. Wage and property limits start to matter. Certain businesses may have their deduction partially limited. That is where timing and strategy make real impact.
Here are three strategies to help you maximize your deduction this year.
1. Time Income Strategically
When you invoice and recognize revenue affects your QBI. For example, suppose you expect $90,000 in December revenue. Invoicing early could push your QBI from $140,000 to $230,000, increasing your deduction from $28,000 to $46,000. But if you are close to the taxable income threshold, sometimes it makes sense to delay revenue slightly to avoid reducing the deduction through wage/property limits. It’s all about timing.
2. Maximize Retirement Contributions and Adjustments
Contributions to retirement plans reduce taxable income, which can preserve or increase your 199A deduction. For instance, contributing $40,000 to a defined benefit plan might drop taxable income from $210,000 to $170,000. That move alone could increase your deduction from $34,000 to $42,000. It’s a simple decision that often gets overlooked.
3. Buy Qualifying Business Assets Carefully
Purchasing assets that qualify for Section 199A property can increase your deduction through wage and property calculations. Let’s say you buy a $50,000 delivery van or piece of equipment. That investment increases your property basis, which can lift your deduction by thousands. But if you expense too much, your QBI drops. The key is finding the right balance—invest in your business, but make each purchase strategic.
The lesson is simple. Section 199A may have started as a do-nothing deduction, but it can become a powerful lever. Timing income, making strategic retirement contributions, and purchasing assets carefully can all move the needle in a meaningful way.
Looking at my own numbers, I realized the difference between doing nothing and planning intentionally can be tens of thousands of dollars. That’s money that can stay in the business, fund growth, or give you breathing room at year-end.
If you want to take full advantage of the Section 199A deduction and other tax strategies, working with a CPA Pasadena TX or a small business CPA Houston who understands your specific needs is critical. Proper planning, along with accurate Houston bookkeeping, ensures your QBI calculations are precise and maximized.
2025 is the year to act. The deduction is permanent. The opportunities are real. And the decisions you make now will determine how much of your hard-earned income you actually keep.
