The 20% qualified business income deduction is permanent, but professionals in specified service trades or businesses (SSTBs) lose it above certain income levels.
Fields that count as SSTBs
The SSTB fields are health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage, investing and investment management, and trading or dealing in securities or commodities. SSTBs also include businesses that earn endorsement, licensing, or appearance fees, which is the narrow meaning the regulations give to "reputation or skill." Architecture and engineering are specifically not SSTBs. A business isn't an SSTB if less than 10% of its gross receipts come from SSTB services, or less than 5% if gross receipts exceed $25 million.
If your practice is profitable and the owners are 45 or older, Summer Associates can plan the tax side of a cash balance plan with your actuary and TPA.The first consultation is free, with no obligation.
Book a free consultation2026 thresholds
| Single | Married filing jointly | |
|---|---|---|
| Full deduction below | $201,750 | $403,500 |
| Phase-in range | $75,000 | $150,000 |
| Deduction gone above | $276,750 | $553,500 |
These thresholds apply to the household's taxable income, not practice profit. The 2025 law widened the phase-in ranges from $50,000 / $100,000 and added a $400 minimum deduction for taxpayers with at least $1,000 of QBI from businesses in which they materially participate (both amounts are indexed after 2026). That minimum doesn't apply to SSTB income above the phase-in range, because at that income level the practice no longer counts as a qualified business.
Key numbers: threshold $403,500 joint / $201,750 single · phase-in $150,000 / $75,000 · QBI permanent at 20%.
Levers that bring taxable income down
- Pre-tax retirement contributions, especially to cash balance plans, are the most powerful lever. A $200,000 contribution can move an owner from no deduction to a full one.
- Charitable gifts can be bunched into a single year through a donor-advised fund.
- Cash-method practices in particular can shift the timing of income and expenses.
- Spouse employment and household-level planning matter because the test applies to the joint return. Paying a spouse wages doesn't by itself lower joint taxable income. It helps only to the extent the spouse's pay funds pre-tax retirement contributions.
A worked example
An attorney's household taxable income is $520,000 before planning, with $380,000 of QBI from her law firm. Because she is nearly through the phase-in range, her deduction is small. A cash balance plan with a $150,000 contribution brings taxable income to $370,000, below the threshold. Her QBI deduction then becomes roughly 20% of the reduced QBI, about $46,000, in addition to the $150,000 retirement deduction.
Points to watch
- The deduction is computed business by business, so mixed practices, such as a medical practice that also owns real estate, need separate analysis.
- Splitting off non-SSTB activities only works if they're genuinely separate. The regulations treat property or services provided to an SSTB by a business with 50% or more common ownership as SSTB activity, which generally includes rent from an owner-held building LLC.
- Guaranteed payments and S corp wages are not QBI.
- The QBI deduction does nothing for Connecticut tax, because it's taken after AGI and Connecticut starts from federal AGI. Pre-tax retirement contributions, by contrast, lower both federal and Connecticut tax.
How Summer Associates helps
Summer Associates' professional practices team projects household taxable income each fall and sizes retirement contributions and other moves to capture as much of the QBI deduction as possible.
Sources
This guide is general education based on federal and Connecticut law as of 2026-11-15. State rules differ and facts matter. Before acting, get advice for your situation from Summer Associates or another qualified advisor.