The tax code puts your wealth management practice in a category called a specified service trade or business, often shortened to SSTB. Financial services, investment management, and advisory work all fall into this bucket. Engineers and architects are explicitly excluded from this definition. That single classification difference determines whether the QBI deduction phases out at higher income levels or stays available no matter how much you earn.

For 2026, if your taxable income is above roughly $200,000 filing single or $400,000 married filing jointly, the QBI deduction starts phasing out for specified service businesses. Go high enough above those thresholds and the deduction disappears entirely. An engineer at the same income level keeps the full 20% deduction on qualified business income because engineering is carved out of the rules.

This goes back to the 2017 Tax Cuts and Jobs Act. Congress wanted to give pass-through business owners a deduction that brought them closer to the new lower corporate rate, but certain service fields were restricted. Financial services, health, law, and consulting all landed in the limited category. Engineering and architecture were specifically excluded, apparently because they were seen as different from pure advice-based services. The distinction surprises a lot of professional service firm owners who assume they’re all treated the same way.

For you as a wealth manager, this means the QBI deduction probably isn’t doing much work in your tax picture once you’re above those income thresholds. If you’re well above them, it’s doing nothing at all.

That’s actually useful information for planning. When one deduction is off the table, it clarifies which strategies matter more. Retirement contributions, the timing of income and expenses, and how you compensate yourself all become important levers. These are things you can actually control, which is why tax strategy for high-earning advisors focuses on these areas rather than on a deduction that isn’t available.

Smart Outsourced Solutions provides small business bookkeeping services and tax planning for professional service firm owners. Simona Leppala is a CPA and Enrolled Agent who works with wealth managers and other professionals across New England and nationwide. If you want to understand how these rules apply to your specific situation, reach out for a consultation.