Specified Service Trade or Business (SSTB)

Key Information

a Specified Service Trade or Business (SSTB) is a business primarily involved in providing services within specific fields.

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These fields include:

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• Health
• Law
• Accounting
• Consulting
• Athletics
• Actuarial science
• Performing arts
• Financial services
• Investing and investment management
• Any business where the main asset is the reputation or skill of its employees or owners

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Tax Impact

The designation of a business as an SSTB impacts how the Qualified Business Income (QBI) deduction is claimed. When an individual’s taxable income:

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• Is below a specific threshold, business income from an SSTB is treated like any other business for QBI deduction purposes.
• Falls within a specific range, the QBI deduction is gradually phased out for business income from an SSTB.
• Exceeds a specific threshold, business income from an SSTB is excluded from claiming the QBI deduction altogether.

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References

IRS Tax Cuts and Jobs Act, Provision 11011 Section 199A