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QBI deduction affected fed taxes, not profit and loss and not state tax?

I added the QBI deduction. I anticipated the deduction would reduce my business income, which would reduce my personal income, and reduce the tax owed to both state and fed.  Fed owed amount reduced, state didn't reduce (Hawaii) - is this normal?

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1 Reply
HelenaC
New Member

QBI deduction affected fed taxes, not profit and loss and not state tax?

Yes, this is normal because the Qualified Business Income (QBI) deduction is a federal deduction only. 

  • It is not an above the line item deduction and does not affect your Adjusted Gross Income amount so the QBI deduction does not get carried over to your HI income tax return.
  • With the QBI deduction, most self-employed taxpayers and small business owners can exclude up to 20% of their qualified business income from federal income tax (but not self-employment tax) whether they itemize or not.
  • To see how the QBI is calculated, What is the Qualified Business Income (QBI) deduction?
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