If you are a therapist employed by a clinic or agency on a W-2, this article is not for you. This is for private practice — solo or group — where the practice income lands on your own return.
Most guidance for self-employed people mentions the 20% qualified business income deduction as a straightforward benefit. For a health practice that is true, and then at a certain point it stops being true.
The short answer
Health is a specified service trade or business. The IRS lists the SSTB fields as "health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading, dealing in certain assets or any trade or business principal asset is the reputation or skill of one or more of its employees or owners."
What that means in practice:
| Your taxable income | The SSTB question |
|---|---|
| Below the threshold | does not arise — the deduction works normally |
| Inside the phase-in range | limitations phase in; the deduction shrinks |
| Above the range | an SSTB produces no QBI deduction |
The 2026 numbers
From Revenue Procedure 2025-32, for taxable years beginning in 2026:
| Filing status | Threshold | Phase-in range amount |
|---|---|---|
| Married filing jointly | $403,500 | $553,500 |
| Married filing separately | $201,775 | $276,775 |
| All other returns | $201,750 | $276,750 |
That warning is not hypothetical. The stale figures appear on pages that are otherwise perfectly good IRS material, because the pages were written when those were the numbers.
The part that catches practice owners
The threshold is on taxable income, not on practice profit.
That single fact makes the deduction dependent on things happening nowhere near your practice:
- a spouse's salary;
- investment income;
- a good year from a second business;
- whether you itemise.
A solo practice earning the same as last year can have a full deduction one year and none the next, because the return around it changed. The practice did nothing.
It also means the answer cannot be worked out from your books alone. Anyone telling you what your QBI deduction is without seeing the whole return is guessing.
Why retirement contributions matter more here
For most self-employed people, a deductible retirement contribution saves tax at their marginal rate. Useful, and that is the end of it.
Inside a phase-in range, a contribution does two things at once: it reduces taxable income at the margin and it moves you down the range, which restores part of a deduction that was being taken away. The effective value of that dollar is higher than its face value.
This is the arithmetic the phase-in range creates, and it is why the planning conversation for a health practice looks different from the one for a contractor with the same profit. Work the actual numbers with a qualified tax professional — the interaction is specific enough that a rule of thumb is not much use.
What it does not touch
Self-employment tax. The QBI deduction is an income tax deduction. Your 15.3% is computed separately and is not affected by any of this.
Your ordinary business expenses. Rent, supervision, continuing education, licensing, insurance, software, office costs — all still deductible in the normal way, above and before any of this.
The obligation to report. Nothing here changes what counts as income or when.
What to do with it
- Know which side of the threshold you are on before December, not in April. It is the one number that decides whether any of this matters to you.
- Look at taxable income, not practice profit — and at the whole household return if you file jointly.
- Check every figure against the revenue procedure for your filing year. The stale-numbers problem is real and easy to fall into.
- If you are inside the range, treat retirement planning as a tax decision and run the numbers rather than estimating.
- Keep the practice's books clean regardless. Every deduction below this one behaves normally, and they add up to more than the QBI deduction does for most practices.
The 20% is worth having. It is not worth assuming.
Track it now. Thank yourself in April.
Common questions
Is a therapy practice a specified service trade or business?
What are the 2026 QBI thresholds?
What happens above the threshold if I am an SSTB?
Why do I keep seeing $157,500 and $315,000?
Is the threshold based on my practice income?
Can anything bring me back under the threshold?
Does this change what I owe in self-employment tax?
This article is for educational purposes only and does not constitute tax, legal, or financial advice. Consult a qualified tax professional about your situation.