The $25 million rule is an IRS regulation that applies to specified service trades or businesses (SSTB), like doctor's offices, investment companies, law firms, and more. The $25 million income threshold is further explained below.

A trade or business (determined before aggregation) is not an SSTB if the trade or business has gross receipts of $25 million or less (in a taxable year) and less than 10% of the gross receipts of the trade or business is attributable to the performance of services in an SSTB.

For trades or businesses with gross receipts greater than $25 million (in a taxable year), a trade or business is not an SSTB if less than 5% of the gross receipts of the trade or business are attributable to the performance of services in an SSTB. (Reg. Sec.1.199A-5(c)(1))