What occupations are being considered for the SSTB exclusion and how will the IRS list be published?
Executive summary
Specified service trade or business (SSTB) is the statutory category that can block certain tax benefits for higher‑income pass‑through owners, and Treasury/IRS guidance has long grouped occupations such as health, law, performing arts, athletics, accounting, actuarial services, consulting and many financial‑service roles into the SSTB bucket [1] [2]. For the new “no tax on tips” deduction under the One Big Beautiful Bill Act, Treasury and the IRS are explicitly excluding tips earned “in the course of” SSTBs—meaning several occupations that otherwise customarily receive tips will be ineligible if performed within an SSTB employer or by a self‑employed worker in an SSTB field [3] [4].
1. What the law means by SSTB and which occupations are typically on the list
The Internal Revenue Code and the Section 199A regulations define SSTBs as trades where the principal asset is the reputation or skill of the owners or employees, and Treasury regulations have historically identified health, law, performing arts, accounting, actuarial science, consulting and many financial service roles as examples of SSTBs [1] [2] [5]. Practical IRS and practitioner guidance reiterates that professional services—doctors, dentists, veterinarians, CPAs, financial advisors, consultants, and many entertainers—are commonly treated as SSTBs for QBI purposes [1] [6].
2. Which occupations are being considered for the SSTB exclusion from the tip deduction
Treasury and IRS materials on the “no tax on tips” deduction make clear the SSTB carve‑out will disqualify tips received in specified SSTB fields such as health care, law, athletics and performing arts, even when the worker’s occupation appears on the IRS list of “tipped” occupations [7] [8] [4]. Commentators and trade groups note that self‑employed musicians or entertainers who are in an SSTB would not be eligible for the tip exclusion, while identical work performed for a non‑SSTB employer (for example, a pianist employed by a hotel) could qualify—the employer’s trade or business drives the determination [3] [4].
3. Ambiguities, excluded professions and contested lines
Regulatory history shows several gray areas and explicit carveouts: Treasury previously excluded architecture, engineering and some financial services from the SSTB label when interpreting 199A, and commentators urge strict construction so only occupations that “customarily and regularly” receive tips are included in the tipped‑occupation list [1] [4]. Tax practitioners warn that overlap between listed tipped occupations and SSTBs will create cases where being on the tipped list is insufficient because the statutory SSTB exclusion controls—Treasury/IRS guidance must reconcile those overlaps and provide evidence for any occupation’s inclusion [4] [2].
4. How the IRS/Treasury will publish and finalize the occupations list
Treasury and the IRS have already produced a preliminary list of occupations they regard as “customarily and regularly” receiving tips through 12/31/2024, and they plan to publish the official list in the Federal Register as part of proposed regulations, soliciting public comment before final rules are issued—meaning the preliminary list is expected to be “substantially the same” but not final until the formal proposed‑regulation process and public comment window conclude [3] [7]. Officials and industry writeups also anticipate the proposed regulations will include classifications and invite public comments, and that the final rules will follow statutory constraints including the SSTB definitions [3] [4].
5. Practical implementation and information reporting consequences
Implementation will tie into information reporting: taxpayers will claim the tip exclusion on returns (with a new schedule introduced), and future W‑2/Form reporting changes—such as a new occupation code and special qualified‑tips code—are expected as part of IRS implementation work, but those mechanics remain subject to forthcoming guidance tied to the proposed‑regulation timeline [9] [3]. Practitioners caution that even if an occupation appears on the IRS tipped list, tips earned in the course of an SSTB remain ineligible, so employers’ SSTB classification and how tips are reported will be decisive for eligibility [4] [3].
6. Bottom line and where disputes will land
The SSTB exclusion will sweep broadly across traditional professional services—health, law, performing arts, athletics, accounting/consulting and many financial roles are central targets—and Treasury/IRS will publish a formal occupations list through the Federal Register as part of proposed regulations and a public‑comment process, but significant edge‑cases and overlap rules remain to be nailed down in those proposed regs and subsequent guidance [1] [2] [3] [4]. Where reporting does not cover a specific occupation or employer arrangement, the final proposed regulations and the public comments that follow will be the authoritative next step [3].