Physicians, Are You Winning or Losing Under the New Tax Plan?

The tax landscape has changed again. And if you’re a high-earning physician, you’re probably wondering—does this new tax plan help or hurt me?

Well, the answer isn’t as simple as you might think. Some doctors may benefit from new deductions or tax treatments. Others? They could see their tax bills climb. The difference often comes down to structure, timing, and whether you’re getting the right advice.

What Changed in the New Tax Plan?

The 2025 tax plan proposes several updates:

• Adjustments to federal income tax brackets
• Revisions to the Qualified Business Income (QBI) deduction
• Expanded use of SALT deductions for pass-through entities
• More scrutiny on high-income earners using S corporations
• New thresholds on itemized deductions

For physicians, these changes affect how your practice income is taxed, what deductions are available, and how you report your income.

How Tax Advisors Help You Stay Ahead

A good tax advisor doesn’t just file your return. They help you:

• Restructure income: Shift from W-2 to 1099 or establish an S corporation to unlock better deduction opportunities (like this guide explains).
• Leverage SALT deduction strategies: Learn how pass-through entity elections can reduce your federal taxable income (see details at the IRS Tax Tips).
• Use advanced savings vehicles: Consider private reinsurance or self-insurance arrangements).
• Deduct business-related vacations: Travel for CME or medical conferences? Those may be deductible if structured properly (see how).
• Avoid double taxation: Especially with IRAs or when selling a practice (UBIT and asset sale guide).

Are You Structured for Tax Efficiency?

Here’s the thing: many physicians are still taxed like employees—even when they’re running their own practices. That means missing out on deductions, retirement planning tools, and ways to shield income.

Ask yourself:

• Am I still filing as a sole proprietor?
• Do I pay self-employment tax on everything?
• Have I set up a defined benefit plan or solo 401(k)?
• Do I take advantage of health reimbursement or travel reimbursement plans?

If not, you might be losing.

1099 Physicians Have More Options

If you’re earning income as an independent contractor or locum tenens, you’re operating in a different tax world. And that’s a good thing—if you know how to take advantage of it.

You can choose your business entity

A 1099 physician isn’t locked into being a sole proprietor. You can form an LLC or elect S corporation status to potentially reduce self-employment taxes and gain access to more advanced tax planning tools.

• An S corp lets you split income between salary and distributions—only the salary portion is subject to payroll tax.
• An LLC can give you legal liability protection while allowing flexibility in taxation.

You control your deductions

Unlike W-2 earners, you can deduct expenses directly related to your work. That includes:

• Licensing and continuing education
• Travel for locum shifts or conferences
• Home office expenses
• Professional memberships and subscriptions
• Medical equipment, software, and supplies

With the right structure, even meals and mileage can be partially deductible.

Bigger retirement savings potential

As a 1099 contractor, you’re not bound by the same limits as employees. You could:

• Contribute up to $69,000 (2025 limit) into a solo 401(k) or SEP IRA
• Layer in a defined benefit plan if your income is high and stable
• Use retirement contributions to reduce taxable income while building wealth faster

Health and insurance advantages

You may also qualify to:

• Deduct 100% of your health insurance premiums
• Reimburse yourself tax-free through a Health Reimbursement Arrangement (HRA) if structured correctly
• Explore captive insurance or self-insurance strategies for risk management and tax benefits

More strategic flexibility

Being 1099 means you’re the business. You decide how your income flows, when to invest in equipment, and when to defer or accelerate income. With a good tax advisor, you can plan quarterly tax payments, income shifting, or set up non-clinical income streams for long-term strategy.

For a full breakdown, refer to our 1099 contractor tax guide.

Winning Physicians Use These Tactics

Here’s what physicians winning under the new plan tend to do:

• Add non-clinical income streams (like this)
• Lock in deductions before thresholds are lowered
• Use income shifting or spousal employment
• Leverage real estate and depreciation strategies (real estate tax guide)
• Combine multiple tax strategies throughout the year—not just at filing time

When a Tax Advisor Is Worth It

If your advisor is just punching numbers into a form in April, you’re probably overpaying.

You want someone who:

• Thinks in terms of strategy—not just compliance
• Monitors upcoming tax legislation
• Tailors a plan to your exact income and structure

If your advisor hasn’t mentioned the new SALT deduction path, private insurance, or your S Corp salary—we need to talk.

FAQ

What is the new SALT deduction and how does it work for physicians?
It allows pass-through entities like S-Corps and LLCs to deduct state taxes at the entity level, bypassing the $10,000 SALT cap.

Should I switch from W-2 to 1099 in 2025?
If you want more control over your taxes and greater deduction potential, yes. But only if you set it up right.

Can I really deduct vacations?
Business-related travel is deductible when documented correctly. Think CME trips, conferences, or site visits.

Is it too late to fix my structure for this year?
Not at all—but the earlier you act, the better. Many strategies take months to implement.

How can I tell if I’m overpaying in taxes?
If you’re not getting proactive advice, haven’t reviewed your structure in years, or your tax bill surprises you—you’re likely overpaying.

Want to know if you’re winning or losing under the new tax plan?
The answer starts with a conversation—and a better tax strategy.

Ready to talk strategy? Start here.

Visit contact physiciantaxsolutions.com to schedule a consultation and learn how we can help you take control of your tax strategy today.

This post serves solely for informational purposes and should not be construed as legal, business, or tax advice. Individuals should seek guidance from their attorney, business advisor, or tax advisor regarding the matters discussed herein. physiciantaxsolutions.com assumes no responsibility for actions taken based on the information provided in this post.