Physician Tax Deductions: The Complete 2026 Write-Off Guide

Most physicians know they should be reducing their tax burden, but many assume they're already capturing everything. The reality is that your available deductions depend almost entirely on your employment structure — and the rules changed permanently with the One Big Beautiful Bill Act (OBBBA, July 2025). A W-2 hospital attending and a 1099 locum tenens physician operate in different tax universes. This guide maps exactly which deductions apply to which situation, with 2026 values verified against IRS publications.

Your employment structure determines everything

The single most important factor in your tax deduction landscape is how you receive income:

The fundamental problem: the Tax Cuts and Jobs Act (TCJA, 2018) suspended unreimbursed employee expense deductions, and the OBBBA made this permanent starting 2026. If you're purely W-2, you've permanently lost the ability to deduct CME costs, licensing fees, professional dues, or any other work expense you pay out-of-pocket — federally. (Some states, including California and New York, still allow these at the state level.)

Above-the-line deductions for all physicians

These reduce your adjusted gross income (AGI) directly, regardless of whether you itemize. They're available to any physician if the underlying income qualification is met.

Student loan interest — limited for most attendings

You can deduct up to $2,500 in student loan interest per year as an above-the-line adjustment.¹ For 2026, the deduction phases out between $85,000 and $100,000 MAGI (single) or $175,000 and $205,000 MAGI (married filing jointly). Most attendings are completely phased out. Residents and fellows with incomes below $85,000/$175,000 may capture the full $2,500 while their income is still low.

Health insurance premiums — self-employed only

If you have any Schedule C income (even from moonlighting), you can deduct 100% of health insurance premiums paid for yourself, your spouse, and dependents as an above-the-line deduction — as long as you're not eligible for employer-subsidized coverage. This includes dental and vision premiums. For a physician paying $1,800/month in family premiums, this is $21,600/year off AGI.

One-half of self-employment (SE) tax

When you have 1099 income, you pay SE tax at 15.3% (12.4% Social Security on first $184,500 + 2.9% Medicare, plus 0.9% Additional Medicare on income over $200,000 single/$250,000 MFJ). You deduct exactly half of your SE tax liability above-the-line. On $200,000 of net 1099 income, this is roughly $14,000 off your AGI.

HSA contributions

If you have a high-deductible health plan (HDHP), you can contribute $4,400 (self-only) or $8,750 (family) in 2026² and deduct every dollar above-the-line. The HSA is the only account with a triple tax advantage: deductible on the way in, tax-free growth, tax-free for qualified medical expenses. See the physician HSA guide for the invest-not-spend strategy used by high-income physicians.

Retirement contributions

Covered in depth in the retirement section below — these are among the highest-value deductions available to physicians.

Schedule C deductions for 1099 physicians

If you have any self-employment income — locum tenens contracts, telehealth shifts, independent contractor work, moonlighting at a private group, or solo practice — you have Schedule C. These are ordinary and necessary business expenses that reduce your net self-employment income, and therefore both your income tax and SE tax.

Malpractice insurance premiums

Fully deductible as a business expense. For a general internist running $15,000–$25,000/year in premiums, or a surgeon paying $50,000–$80,000+, this is a material deduction. Tail coverage is also deductible in the year paid. If your employer pays for claims-made coverage and you're responsible for the tail when you leave, that tail cost is deductible when you incur it.

Home office deduction (increasingly relevant for telehealth)

You can deduct a home office if it's used regularly and exclusively for business, and it's your principal place of business. Two methods:

• Simplified method: $5 per square foot, up to 300 sq ft = up to $1,500/year. No depreciation complications at sale.
• Regular method: allocate actual home expenses (mortgage interest, utilities, insurance, depreciation) by business square footage percentage. Higher deduction but requires tracking and triggers depreciation recapture when you sell.

Telehealth physicians who maintain a dedicated room exclusively for patient consultations qualify. "Regularly and exclusively" is strict — a room that doubles as a guest bedroom doesn't count.

Vehicle mileage — business travel

The 2026 standard mileage rate is $0.725 per mile for business use.³ Deductible mileage for physicians includes driving between practice locations, to hospitals for patient care, to professional conferences (if not your normal commute), and to supplier or vendor meetings. Commuting from home to your primary workplace is never deductible. Keep a contemporaneous mileage log — the IRS requires date, destination, business purpose, and miles for each trip.

Continuing medical education (CME)

CME courses, conferences, and required training materials are fully deductible as ordinary business expenses on Schedule C. This includes:

• Course registration fees
• Travel, hotel, and meals at CME conferences (50% of meals)
• Online CME subscriptions
• CME materials and books

Important: if your employer has a CME allowance and reimburses these costs, you cannot double-deduct them. Only out-of-pocket expenses not reimbursed by anyone qualify.

Medical licensing fees

State medical license renewal fees vary significantly by state ($100–$600 every 1–2 years), but all are deductible as ordinary business expenses for self-employed physicians. Locum tenens physicians who hold licenses in multiple states deduct each license fee. Interstate Medical Licensure Compact (IMLC) application fees are also deductible.

DEA registration

DEA registration costs approximately $888 per 3-year period for individual practitioners.⁴ Fully deductible on Schedule C as a licensing and regulatory cost required to practice.

Board certification and recertification fees

Specialty board exam fees and ongoing Maintenance of Certification (MOC) fees are deductible. ABIM charges ~$2,200–$4,000 for initial certifications and $550–$750 for annual MOC fees. ABS, ABFM, and other boards have similar fee structures. All are ordinary business expenses for a physician.

Professional memberships and dues

AMA dues (~$420/year), specialty society memberships (ACC, ACS, APA, etc.), and local/county medical society dues are all deductible business expenses. These typically total $500–$2,000/year depending on specialty and how many organizations you maintain.

Medical reference subscriptions

UpToDate (~$550/year), DynaMed, Epocrates, medical journals (NEJM ~$245/year, JAMA ~$270/year), and clinical decision support tools are fully deductible. Physicians who use these tools for patient care — not just personal interest — have a clear business purpose.

Accounting, legal, and tax preparation fees

Fees paid to a CPA for business tax return preparation (Schedule C, S-corp return, partnership return) are deductible. Legal fees related to business matters (contract review, business formation, malpractice consultation) are deductible. Personal tax preparation fees for your individual return's non-business portion are no longer deductible (eliminated by TCJA/OBBBA).

Equipment and supplies

Medical equipment purchased for your practice, as well as the business portion of your phone, computer, and internet connection, are deductible. Under the OBBBA's permanent 100% bonus depreciation for property placed in service after January 19, 2025, qualifying equipment can be written off in full in the year of purchase rather than depreciated over time.

Scrubs and work attire

Work clothing that is not suitable for everyday wear and required as a condition of employment is deductible. Scrubs and surgical attire typically qualify. White coats and professional attire that could double as street clothing generally do not, unless required by employer policy and not appropriate for personal use.

What W-2 physicians can no longer deduct — permanently

Before the TCJA (2018), physicians who were W-2 employees could deduct unreimbursed employee expenses on Schedule A (miscellaneous itemized deductions subject to a 2% AGI floor). The TCJA suspended this, and the OBBBA permanently eliminated it starting in 2026. There is no longer a federal path to deducting CME costs, licensing fees, professional dues, or any other work expense you pay out-of-pocket as a W-2 employee.

Note on state taxes: Several states, including California and New York, still allow unreimbursed employee business expenses as a state itemized deduction. Depending on your state income tax rate, the state deduction may partially offset the federal loss. Check with a CPA familiar with your state's treatment.

The CME deduction trap — and what to do about it

This is the most common mistake physicians make. A W-2 attending who spends $3,000 out-of-pocket on CME conferences gets nothing federally. A locum tenens physician who spends the same $3,000 deducts it all on Schedule C. The difference isn't the expense — it's the employment structure.

If you have any 1099 income, even from occasional moonlighting, CME costs paid from your business are deductible against that income. The key is documenting that the expense relates to maintaining your license and skills in your current trade or profession, which is straightforward for physicians.

The planning implication: if you're a W-2 physician who moonlights even occasionally, structuring that moonlighting as 1099 (not misclassified as W-2 by the engager) gives you a Schedule C on which legitimate professional expenses can land.

Additional deductions for practice owners

Section 199A / Qualified Business Income (QBI) deduction

Practice owners (solo practitioners, partnerships, S-corps) may deduct up to 20% of qualified business income under §199A. For a physician netting $400,000 from private practice, this could be an $80,000 deduction — saving $29,600 in taxes at the 37% rate. The OBBBA made this deduction permanent with widened phase-out thresholds. Physician practices (medicine and health) are Specified Service Trades or Businesses (SSTBs), so the deduction phases out above $394,600–$544,600 MFJ in 2026. See the full analysis in the physician tax strategy guide.

100% bonus depreciation on medical equipment

The OBBBA restored 100% bonus depreciation permanently for qualifying property placed in service after January 19, 2025. Medical equipment, computers, office furniture, and other tangible business property can be written off in full in the year of purchase rather than depreciated over 5–7 years. For a physician opening or equipping a practice, this compresses the deduction from years of waiting into immediate tax relief.

Start-up cost deduction (§195)

When opening a new practice, start-up costs (legal fees, initial marketing, equipment research, pre-opening staff training) can be deducted up to $5,000 in the first year, with the remaining costs amortized over 15 years. Organizational costs for forming an LLC or corporation are deductible under §248/§709. If start-up costs exceed $50,000, the $5,000 immediate deduction phases out.

Bad debt deduction for practices

A medical practice that uses the accrual method can deduct accounts receivable that become uncollectible. Cash-method practices (most small physician practices) cannot — there's no deduction because the income was never recognized. If you're on accrual and have written-off AR from patients or insurers, that loss is deductible.

Retirement contributions — the biggest lever

No category of deductions has more impact on a physician's lifetime tax bill than retirement account contributions. These reduce your taxable income dollar-for-dollar in the year of contribution, and the tax-deferred growth compounds for decades.

A 45-year-old physician who is a solo practice owner can stack a solo 401(k) + cash balance plan and shelter $150,000–$200,000+ from taxes in a single year. That's not a hypothetical — it's the structure that physicians who start late and earn high incomes use to close the retirement gap. See the cash balance plan guide and physician retirement catch-up calculator for the detailed math.

Priority order for physicians minimizing taxes

Given everything above, here is the sequence that maximizes after-tax wealth for most physicians:

1. Capture employer match first. Any 401(k)/403(b) match is a 50–100% instant return. Contribute at least enough to get the full match before anything else.
2. Max your HSA if you're on an HDHP. $4,400/$8,750 above-the-line, triple-tax-advantaged.
3. Max your 401(k)/403(b) deferral. $24,500 (or catch-up). The largest single deduction most W-2 physicians have.
4. Max 457(b) if available. If you're at a governmental hospital, an additional $24,500+ off AGI. Non-governmental 457(b) plans carry employer creditor risk — evaluate carefully.
5. Backdoor Roth IRA for both spouses (not deductible, but tax-free growth).
6. Solo 401(k) + cash balance plan for any 1099 or practice income. This is where physicians with entrepreneurial income or private practice ownership capture the largest deductions.
7. Schedule C expense audit. If you have 1099 income, work with a CPA to confirm you're capturing all legitimate business expenses.
8. Accountable plan review. If you're W-2 only, push your employer to establish or expand reimbursement plans for CME, licensing, and professional expenses.

The underlying principle: every dollar sheltered in a pre-tax retirement account in the year you earn it saves 32–37 cents in federal taxes for most attending physicians. No investment return compounds as reliably as a guaranteed 37% tax saving on the first dollar in.