SSTB Definition: Listed Fields, Exclusions, and Income Thresholds

A Specified Service Trade or Business, or SSTB, is the definition federal tax law uses to single out certain pass-through businesses whose owners lose the Qualified Business Income (QBI) deduction once their taxable income climbs past set thresholds. An SSTB is a business in one of ten listed service fields, or a business that monetizes the owner’s fame in specific ways. The label only matters at higher incomes: for 2026, it starts to bite above $201,750 for single filers and $403,500 for joint filers, and fully disallows the deduction above $276,750 single and $553,500 joint.¹

Below those thresholds, SSTB status is irrelevant. A doctor, a lawyer, and a plumber all get the same QBI treatment. The category was written for owners whose income puts them into the phase-in range or above it, where Congress decided that professional service firms built on the owner’s personal expertise should be treated differently from capital-intensive or wage-heavy businesses.²

The Listed SSTB Fields

The statute and IRS regulations name specific service fields that are automatically SSTBs. The common thread: the principal value comes from the knowledge, training, or expertise of the people doing the work rather than from equipment, inventory, or payroll.² What matters in each field is the carve-out, because that’s where most disputes about classification actually land.

Health

Medical services provided by physicians, dentists, nurses, pharmacists, veterinarians, physical therapists, psychologists, and similar healthcare professionals acting in that capacity.³ A gym, health spa, medical device company, or pharmaceutical manufacturer is not an SSTB, even though those businesses relate to health. The line is whether you personally provide medical care to patients.

Law

Legal services performed by lawyers, paralegals, arbitrators, and mediators. Support businesses that serve law firms without providing legal expertise, like a printer or a legal-tech vendor, are not SSTBs based on their client base alone.³

Accounting

Accountants, enrolled agents, tax return preparers, and financial auditors. Tax prep and audit work sit squarely in this category.³

Actuarial Science

Risk analysis using mathematical and statistical methods, typically by credentialed actuaries. Narrow field, but if that’s your business, it’s an SSTB.

Performing Arts

Actors, musicians, singers, entertainers, and directors performing or creating performing art. The regulations exclude broadcasting and sound engineering technicians, stagehands, and other technical or support workers who aren’t performing the art themselves.³

Consulting

Providing professional advice and counsel to clients. The important carve-out: advice embedded in selling goods or non-SSTB services doesn’t count. A software company that advises clients on how to implement its product is selling software, not consulting. What matters is whether advice itself is the product.³

Athletics

Professional athletes, coaches, and team managers. Classification follows the individual whose income derives from athletic performance or managing others’ performance.

Financial Services

Wealth management, retirement planning, investment advisory services, and similar work. The regulations specifically exclude banking functions like taking deposits and making loans, which keeps traditional banks and credit unions out.³

Brokerage Services

Arranging transactions between buyers and sellers for a commission or fee. The final regulations carved out a notable exception: real estate agents, real estate brokers, insurance agents, and insurance brokers are not treated as performing brokerage services for SSTB purposes.³ That exception matters enormously for the real estate and insurance industries.

Investing, Investment Management, Trading, and Dealing

Businesses that invest, manage investments, trade, or deal in securities, partnership interests, or commodities. This captures hedge funds, private equity firms, and trading operations.²

The Reputation-or-Skill Catch-All

Beyond the listed fields, the statute reaches any business “where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners.” Read literally, that language could swallow nearly every service business. The IRS narrowed it in the regulations to three specific ways of monetizing personal fame:³

Fees for endorsing products or services. A celebrity chef paid to put their name on a cookware line earns SSTB income from that deal.
Income from licensing your image, name, voice, signature, or likeness.
Appearance fees for showing up at events or appearing on television, radio, or other media.

Being skilled or well-known doesn’t automatically make your business an SSTB under this clause. A famous restaurateur’s restaurant income is not SSTB income. Their endorsement deal is. The IRS drew the line at directly monetizing your persona, not at being good at what you do.

Engineering and Architecture Are Excluded

Congress carved engineering and architecture out by statute. Section 199A defines an SSTB by cross-referencing the list in Section 1202(e)(3)(A) but explicitly tells you to ignore the words “engineering” and “architecture” in that list.² Engineering and architecture firms can claim the full QBI deduction regardless of the owner’s income, subject only to the wage-and-capital limitations that apply to all qualified businesses above the threshold.

The exclusion covers the direct provision of engineering and architectural services. If an engineering firm runs a separate consulting practice offering strategic business advice unrelated to its engineering work, that consulting activity can still be SSTB activity under the consulting field.

Mixed Businesses and the De Minimis Rule

Plenty of businesses straddle the line. A technology company might earn most of its revenue from software sales while also doing some consulting. The IRS uses a de minimis safe harbor so a small slice of SSTB activity doesn’t taint the entire business:¹

Gross receipts of $25 million or less: if less than 10% of gross receipts come from SSTB activities, the entire business escapes SSTB classification.
Gross receipts above $25 million: the threshold drops to 5%.

These are bright lines. Hit 10% (or 5% for larger businesses) and the whole business is treated as an SSTB, not just the service portion. Tracking your revenue mix closely matters if you’re near the boundary. For businesses that clearly exceed the threshold, the regulations allow separate reporting of SSTB and non-SSTB activities if they are distinct trades or businesses with separate books and records.

Splitting a Business Doesn’t Get Around the Rules

An obvious workaround, once Section 199A passed, was to split an SSTB into multiple entities: one entity performs the regulated service, others own the building or employ the administrative staff. If the support entities don’t themselves perform SSTB services, maybe they qualify for the deduction. The IRS shut this down.

Under the regulations, if a business provides property or services to an SSTB and the two share 50% or more common ownership, the portion serving the SSTB is treated as a separate SSTB itself.³ The IRS illustrates this with a law firm example: split the firm into three entities (one for legal work, one to own the building, one for admin staff), and if all three share the same owners, the building entity and the admin entity are both treated as SSTBs because they serve the commonly-owned legal practice.

The rule is proportional. If the building entity leases half its space to the law firm and half to unrelated tenants, only the half serving the law firm gets SSTB treatment. The unrelated-tenant portion stays clean.

Where the Income Thresholds Sit

The classification only becomes financially relevant once your taxable income enters the phase-in range. For 2026 the numbers are:

Below $201,750 single or $403,500 joint: SSTB status is irrelevant, and the full deduction is available subject to other general limits.
Inside the phase-in range ($201,750 to $276,750 single; $403,500 to $553,500 joint): the deduction gradually shrinks. A declining fraction of SSTB QBI counts as your income climbs through the window.
Above $276,750 single or $553,500 joint: no QBI from the SSTB qualifies for the deduction.¹

The income thresholds adjust annually for inflation, so figures for prior years are lower and future years will likely be higher. If you’re above the lower threshold and have SSTB income, expect to file Form 8995-A and complete Schedule A rather than the simpler Form 8995.¹

1
Internal Revenue Service. Instructions for Form 8995-A – Deduction for Qualified Business Income
2
Office of the Law Revision Counsel. 26 USC 199A – Qualified Business Income
3
eCFR. 26 CFR 1.199A-5 – Specified Service Trades or Businesses and the Trade or Business of Performing Services as an Employee