What is a Specified Service Trade or Business (SSTB) and how does it affect the QBI deduction?

A Specified Service Trade or Business (SSTB) is a business type where income is primarily from personal skills and reputation, as defined by IRC §199A(d)(1)(B). The following are explicitly classified as SSTB: - **Health** (doctors, dentists, physical therapists, etc.) - **Law** (attorneys, paralegals) - **Accounting** (CPAs, bookkeepers) - **Actuarial science** - **Performing arts** (actors, musicians) - **Consulting** (business consultants, life coaches) - **Athletics** (professional athletes, coaches) - **Financial services** (financial advisors, investment managers) - **Brokerage services** (securities brokers) - **Any trade or business where the principal asset is the reputation or skill of one or more of its employees or owners** **NOT SSTB (full QBI deduction at any income level):** Engineering, architecture, software development, web design, marketing, real estate, manufacturing, retail. **How SSTB affects the QBI deduction:** - Below $197,300 taxable income (single): SSTB businesses get the full 20% QBI deduction - $197,300–$247,300 (single): SSTB deduction phases out proportionally - Above $247,300 (single): SSTB businesses receive $0 QBI deduction For married filing jointly, the thresholds are doubled: $394,600 and $494,600.

• SSTB: law, health, accounting, consulting, financial services, performing arts, athletics
• NOT SSTB: engineering, architecture, software dev, web design, real estate, retail
• SSTB gets full QBI at low income; deduction phases out and eliminates at high income
• Phase-out window: $197,300–$247,300 (single) / $394,600–$494,600 (MFJ) in 2025
• Non-SSTB businesses get full 20% QBI at any income level