SSTB
SSTB is a category of businesses excluded from the full QBI deduction at higher income levels under Section 199A. Categories include health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, investment management, and any business whose principal asset is the reputation or skill of one or more employees.
The SSTB classification was introduced to prevent traditional 'service' businesses (lawyers, accountants, doctors, financial advisors, consultants) from receiving the QBI deduction that was primarily intended to benefit non-service pass-through entities. For taxpayers below the income threshold, the SSTB classification doesn't matter — the QBI deduction applies regardless. For taxpayers above the threshold, the SSTB deduction phases out completely.
The boundaries of SSTB classification are sometimes ambiguous. A medical practice is clearly SSTB; a software company is clearly not. But a software company whose business depends on the reputation of its founders may technically meet the 'principal asset is reputation or skill of employees' test. IRS guidance has clarified some boundary cases (e.g. real estate brokerage is not SSTB even though it's a service), but ambiguous cases require careful classification analysis.
For SSTB business owners near the income threshold, planning strategies focus on staying below the phaseout — typically through additional retirement-plan contributions, charitable giving, or entity restructuring. Above the upper phaseout limit, the SSTB receives no QBI deduction, which makes the 20% deduction effectively meaningless for high-income service-business owners.