SSTB (specified service trade or business) is a classification given to certain service businesses. If your business provides a service rather than a product, the business likely classifies as a SSTB.  This is important because being an SSTB reduces or eliminates the 20% Qualified Business Income (QBI) deduction at higher income levels.

The SSTB label is irrelevant if your 2025 total taxable income (which includes nonbusiness as well as business income) is $197,300 (or $394,600 if you're filing jointly) or less. At these lower income levels, owners of SSTB as well as non-SSTB businesses can qualify for the same QBI deduction.

The QBI deduction phases out for SSTBs. You'll still qualify for a partial deduction based on the applicable percentage if your taxable income before the QBI deduction is:

Select your business for more details on what's considered an SSTB:

Businesses that are not SSTBs

Many single-owner and self-employed businesses aren't SSTBs, such as:

Brokerage, investment, and trading services

Brokers or agents who facilitate transactions between buyer and seller for a commission or fee are considered SSTBs, with the exception of those working in the real estate or insurance fields.

Stockbrokers and securities dealers are also SSTBs, as are investing, investment management, and asset management services. Property management is excluded if the business directly manages real property.

Trading in securities, commodities, or partnership interests is considered an SSTB if there is a profit motive, irrespective of whether the trader services their own account or that of others. However, someone who routinely engages in hedging transactions as part of running their non-trading business (for example, a farmer) wouldn't be considered a commodities trader.

Accounting and financial services

Businesses that provide accounting or financial services are considered SSTBs, including:

Services involving payment processing, billing analysis, or banking are excluded.

Health services

Healthcare professionals who provide services directly to their patients are SSTBs, including:

Services that improve health or relate to healthcare but are not directly related to providing medical services aren't SSTBs. For example:

Consulting

A trade or business primarily engaged in consulting services is an SSTB.

Consulting involves providing professional advice and counsel to clients. If this isn't the main thrust of your business, you're not really a consultant (and in turn, not an SSTB).

Example: Kimi has been breeding and showing dogs for 30 years. She freely gives advice to others because she loves helping other dog owners. She isn't considered a consultant because providing advice is not the primary focus of her business and also because she doesn't charge for her expertise.

However, if Kimi changed her career to a dog behavior expert and started charging for her advice, she'd be considered a consultant and hence an SSTB.

Legal services

In addition to lawyers and attorneys, services provided by paralegals, mediators, and legal arbitrators are considered SSTBs.

However, services performed in the legal arena that are not unique to the field of law (for example, stenography or document delivery) aren't SSTBs.

Athletics

Services performed in the field of athletic competition are considered SSTBs. This includes athletes, coaches, sports officials, team managers, and team owners.

Services related to athletics that use transferable knowledge and skills, such as equipment upkeep and repair, turf maintenance, snow grooming, and broadcasting aren't SSTBs. For example, a greenskeeper has the knowledge and skill to nurture and maintain any lawn, not just sports-specific ones.

Performing arts

Services performed by those who participate in the creation of performing arts, for example actors, singers, musicians, entertainers, playwrights, directors, and so forth are considered SSTBs.

Services related to the performing arts that use transferable knowledge and skills, such as those provided by disk jockeys, stagehands, costume designers, and makeup artists are not considered SSTBs. For example, the skills and knowledge acquired by a stagehand can transfer over to home construction and handyman work.

Actuarial science

Actuaries and similar professions that engage in analyzing or assessing the financial costs of risk or uncertainty of events are considered SSTBs.

This excludes services provided by analysts, economists, mathematicians, and statisticians unless they are performing actuarial analysis or assessments.

Endorsements, licensing, appearances (etc.) associated with someone's reputation or skill

Any trade or business that primarily earns its income from any of the following is an SSTB:

Common examples include: