Section 4: 22–32%R14

Adjustments, Deductions, and the QBI Deduction

Exam insight

AGI is the pivot point of the individual return. Adjustments bring it down, and dozens of phaseouts are measured against it. The §199A QBI deduction, now permanent under OBBBA, is a heavily tested below-the-line computation on REG.

What AICPA wants you to know

1Distinguish above-the-line adjustments from itemized deductions
2Compute AGI and the major itemized deductions and their limits
3Compare the 2025 standard deduction to itemizing
4Apply the §199A QBI deduction, including the W-2/UBIA limit and SSTB phaseout
5Apply the permanent OBBBA QBI rules, including the new $400 minimum deduction
6Order the deduction stack correctly: above-the-line, then standard/itemized, then QBI

Patterns in this topic

The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.

The Deduction MenuSort each deduction by where it lands: above the line to reach AGI, then the greater of the standard deduction or itemized below it.The QBI DeductionTwenty percent of qualified business income, but above the threshold the SSTB cliff and the wage-or-UBIA cap take over.

Exam tip

Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.