If you’re like most physicians, taxes aren’t exactly your favorite subject.
You trust your accountant, glance at your returns once a year, and assume things are probably fine.
But every year, we sit down with physicians who are smart, successful, and careful with their money—and yet they’re quietly overpaying taxes by tens of thousands of dollars.
Not because they’re careless, but simply because they never knew certain strategies even existed.
We’re not talking about risky loopholes or obscure tax code. These are straightforward methods that specifically apply to physicians, but many accountants just never bring them up.
Here are five valuable tax hacks for doctors that help our clients save tens of thousands of dollars each year.
1. Choose the Right Business Structure (This Alone Could Save You $10k–$40k/Year)
Many doctors default to operating as a sole proprietor or single-member LLC, especially early in their careers.
But if your income has grown (think $200k+), there’s a good chance you’re leaving money on the table.
Let’s say you’re an S-Corp instead of an LLC. Now you can pay yourself a reasonable salary and take the rest of your earnings as profit distributions, which aren’t subject to self-employment tax. This one change usually saves doctors tens of thousands each year in payroll taxes.
One thing to note: Don’t just stop at filing the S-Corp paperwork. You also need to actually run payroll for yourself, file the right quarterly forms, and stay on top of compliance. It’s not DIY territory, but it is absolutely worth doing.
2. Use Bonus Depreciation for Equipment and Technology (Even for Smaller Purchases)
If you’ve recently invested in new diagnostic equipment, treatment chairs, ultrasound machines, or even medical-grade tablets and office technology, you can deduct the entire cost in the year of purchase using bonus depreciation.
Yes, even that $1,500 digital otoscope or $8,000 laser unit counts.
And here’s the kicker: You can also include software and office furniture. So if you revamped your EHR system or redesigned your patient waiting area, those expenses might be deductible too.
Watch out for 2025 changes: Bonus depreciation dropped from 60% to 40% in 2025, and it’s decreasing further unless Congress steps in. The clock is ticking; make those purchases count this year.
3. Max Out Retirement Contributions (And Consider “Stacking” Plans)
Sure, you’ve heard that you can put money into a 401(k). But did you know:
- You can contribute up to $70,000 per year into a Solo 401(k) or SEP IRA (depending on your income)?
- If your practice is structured as an S-Corp or partnership, you might also qualify to set up a Cash Balance Pension Plan, which can allow contributions of $100k – $300k+ annually.
These plans are especially useful for high-earning doctors who want to accelerate retirement savings and drop into a lower tax bracket.
Want to get even more aggressive? Ask us how some physicians “stack” a 401(k) and a cash balance plan to sock away more than $250,000/year, all pre-tax.
4. Offer Employee Benefits That Are Tax-Savvy (and Actually Retain Talent)
Hiring and keeping good people isn’t easy. But offering the right benefits can be a game changer for your team and your tax bill.
Tax-smart benefits to consider:
- Health Reimbursement Arrangements (HRAs): You can reimburse employees for medical expenses – tax-free for them and deductible for you.
- Dependent Care FSA: Help working parents on your team pay for childcare, and deduct the costs.
- Tuition Reimbursement: Set up a program to help team members pay for education; up to $5,250 per person per year is tax-free.
And even better?
Many of these plans also work for you as the owner. For example, with a properly structured HRA, your own out-of-pocket medical costs could become deductible through the business.
5. The Home Office Deduction—Yes, It’s Real (Even for Doctors)
Think the home office deduction is just for influencers and freelancers? Think again.
If you regularly and exclusively use a space in your home for practice admin (charting, follow-ups, telehealth, insurance work, etc.), you could qualify.
The deduction is based on the percentage of your home used for work, and it can include a share of your:
- Mortgage interest or rent
- Utilities
- Internet
- Homeowners insurance
- Even depreciation
Just be aware that the IRS does require that the space be your principal place of business for the work you do from home, not a shared kitchen counter. But if you’re genuinely using a dedicated home workspace for practice-related tasks, don’t overlook this commonly missed tax savings.
The Short Answer? You’re Probably Paying Too Much in Taxes
It’s well known that taxes are one of the biggest expenses for physicians.
But with a little proactive strategy and a few industry tips, you can keep more of what you earn and use those savings to build real wealth.
At MedTax, we specialize in working with doctors.
We understand the nuances of practice ownership, hospital contracts, telehealth income, and all the other wrinkles in your world.
You didn’t go to med school to figure out tax law, and you shouldn’t have to.
Want to see how much you could save?
Book a free consultation with a MedTax advisor and let’s take a look together.
We’re always here to help.
Until next time.
