What type of business is considered a Specified Service Trade or Business (SSTB)?

A Specified Service Trade or Business (SSTB) is a business where the principal asset is the reputation, knowledge, expertise, or skill of its owners or employees.

The SSTB designation is important because it can affect eligibility for the Qualified Business Income Deduction (QBID), also known as the Section 199A deduction. While many business owners can claim a deduction of up to 20% of qualified business income, special income limitations apply to SSTBs.

For taxpayers whose taxable income is below the annual Section 199A threshold amounts, an SSTB generally qualifies for the QBID in the same way as other eligible businesses.

However, when taxable income exceeds the applicable thresholds and phase-in ranges, the deduction may be reduced or eliminated for SSTB owners.

Beginning with tax year 2026, the expanded phase-in ranges established by the One Big Beautiful Bill Act (OBBBA) apply when determining whether SSTB limitations affect the deduction.

Businesses that primarily provide professional advice or guidance to clients.

Examples include:

Not every business that provides a specialized service is automatically considered an SSTB. The determination depends on the specific activities performed and how the business earns its income.

For example, businesses primarily engaged in:

For taxpayers with income above the applicable limits, the deduction may be partially reduced or fully phased out.

The program will automatically apply the appropriate Section 199A rules and determine whether any income-based limitations affect your Qualified Business Income Deduction.