Specified Service Trade or Business (SSTB)

A Specified Service Trade or Business (SSTB) is a category of businesses defined in IRC Section 199A(d)(2) that lose access to the Qualified Business Income deduction above the income phase-out thresholds.

Listed SSTB categories

• Health
• Law
• Accounting
• Actuarial science
• Performing arts
• Consulting
• Athletics
• Financial services
• Brokerage services
• Investing
• Investment management
• Trading
• Dealing in securities
• "Any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners"

That last catch-all is broad and the source of most ambiguity.

What's NOT SSTB

The TCJA explicitly excluded:

• Engineering and architecture (probably the most common exclusion to remember)
• Real estate brokerage (interestingly, despite financial services being listed)
• Insurance brokerage

Tech, software, and product companies are generally NOT SSTBs.

Phase-out impact

Below the income thresholds (2026: ~$242K single, ~$484K MFJ), SSTB businesses get the full 20% QBI deduction. Above the full phase-out (about $50K above the threshold for single, $100K for MFJ), SSTB businesses get zero QBI deduction.

Planning for SSTBs

If your business is on the SSTB borderline:

• Drive income below the threshold (Roth conversions, retirement contributions, charitable bunching)
• Hire family or others to reduce QBI specifically (counterproductive in many cases)
• Restructure to split the business (rare and risky — IRS will scrutinize)

For most high-income SSTBs (law firm partners, doctors, consultants), the 199A deduction simply isn't available.