What is qualified business income?

Your income is considered qualified business income if it meets these requirements:

1. It's from a trade or business.
   To be considered a trade or business, you must be regularly involved in the activity and your primary purpose for engaging in the activity must be for income or profit. If you own an interest in a pass-through entity, the trade or business determination is made at that entity's level.
2. Your income is connected to business within the United States.
   Your United States income includes any income, gain, deduction, and loss including income from partnerships, S corporations, sole proprietorships, and certain trusts that are included or allowed in determining your taxable income for the year.

If you qualify, the QBI deduction is limited to 20% of the qualified business income on your return or 20% of the taxable income on your return, whichever is less.