The One Big Beautiful Bill Act is a sweeping piece of legislation that reshapes individual and business tax rules. For physicians, these provisions could affect take-home pay, saving strategies, and practice finances. Whether you’re a hospital employee, a locum tenens doctor, or own a medical practice, the OBBBA will change your tax planning opportunities and ultimately the tax you owe.
In this guide, we highlight some of the most important updates for doctors, explain what’s changing versus what’s staying the same, and offer some tax planning ideas to discuss with your tax advisor.
For more details and numbers, download our quick reference guides to the One Big Beautiful Bill Act for individuals and small businesses.
#1: Individual tax rates
The OBBBA makes permanent the seven tax rates created by the Tax Cuts and Jobs Act of 2017 (TCJA), with the top tax rate remaining at 37%. Without the OBBA, the top tax rate would have increased to 39.6% in 2026.
Capital gains tax rates remain the same at 0%, 15%, and 20%.
What this means for you: Since these changes are more about keeping the status quo, they may not have a significant impact on your tax planning. However, it’s still a good idea to review your withholding or estimated payments to avoid overpaying or underpayment penalties. For practice owners, you may want to revisit how you structure compensation between salary, distributions, and practice reinvestment.
#2: Deductions
The OBBBA also makes the TCJA’s larger standard deduction permanent. Without the OBBBA, the standard deductions for every filing status would be roughly halved starting in 2026.
Itemized deductions
If you still benefit from itemizing, the OBBBA has made a few changes that may affect you:
- SALT cap – The OBBBA temporarily increases the cap on deductible state and local taxes (SALT) from $10,000 to $40,000 per household for the 2025 through 2029 tax years. However, the increased cap is not available to high-income households. For taxpayers with a MAGI between $500,000 and $600,000, the deduction is gradually reduced. The cap is reduced by 30% of the amount their modified adjusted gross income (MAGI) exceeds the $500,000 threshold. Once a taxpayer’s MAGI reaches $600,000 or more, their SALT deduction is effectively limited to the original $10,000 cap, regardless of their total SALT payments.
- Charitable contribution floor – Starting in 2026, only the portion of charitable contributions greater than 0.5% of your AGI will be eligible for deduction. For example, a couple with an AGI of $300,000 could only deduct charitable donations in excess of $1,500.
- Cap on the benefit of itemized deductions – The OBBBA also caps the benefits of itemized deductions for taxpayers in the top tax bracket. If your taxable income falls into the 37% tax bracket, you’ll only be able to deduct $0.35 for every $1.00 of itemized deductions starting in 2026.
Other deductions
One of President Trump’s early talking points about the legislation was “no tax on Social Security.” That didn’t exactly come to fruition, but the OBBBA did create a new deduction for taxpayers age 65 and older. If you qualify, it’s available whether you itemize or claim the standard deduction. However, it’s only available from 2025 through 2028 and phases out for higher-income taxpayers.
The OBBBA also created a new above-the-line deduction for charitable contributions made by non-itemizers. Beginning in 2026, you can deduct cash donations up to $1,000 for single filers or $2,000 for married couples filing jointly. Donations to donor-advised funds and private foundations aren’t eligible.
The OBBBA also created a temporary deduction for car loan interest. This is available starting in 2025, but it phases out for higher-income taxpayers.
What this means for you: Given the changes to the SALT cap deduction, it’s a good time to reevaluate whether itemizing provides more benefits than the standard deduction. If you own property or make significant charitable contributions, itemizing may be more advantageous.
If you’re in the highest tax bracket and are considering a large philanthropic gift, you may want to think about accelerating your gift into 2025 to maximize the deduction before the cap goes into effect.
#3: Family and education planning
Beyond your paycheck and deductions, the OBBBA also makes important changes to family-related credits and education savings options that many physicians rely on.
First, it expanded the types of qualifying expenses that families can pay for with 529 plan funds to include certain elementary or secondary school expenses, whether public, private, or religious. It also permanently allows money in a 529 account to be rolled over into an ABLE account without penalty.
The bill also created a new tax-exempt savings account for minors. Families can contribute up to $5,000 per year to a “Trump account,” and employers can contribute up to $2,500 per employee each year without including the amount in the employee’s taxable income.
A one-time $1,000 credit is also available to each qualifying child born between December 31st, 2024, and January 1st, 2029.
The OBBBA also increased the value of the Child Tax Credit to $2,200.
What this means for you: If you have children, the expanded credits can reduce taxable income, but watch out for phase-outs if you fall in higher-income categories. For practice owners, it’s a good time to consider updating dependent care benefits offered through your practice as part of compensation planning for yourself and employees.
#4: Health savings
The OBBBA permanently restores a pandemic-era rule allowing high-deductible health plans (HDHPs) to offer telehealth services at no cost, even before the deductible is met. This change is retroactive to January 1st, 2025, and ensures that individuals who receive pre-deductible telehealth services can still contribute to their Health Savings Account (HSA). In short, the law makes it easier for people with HDHPs to use telehealth and maintain their HSA eligibility.
Previously, enrolling in a Direct Primary Care (DPC) arrangement with a monthly fee meant you could not contribute to your HSA. Now, thanks to the OBBBA, you can have both a DPC and an HSA-eligible HDHP, as long as the DPC’s monthly fee doesn’t exceed $150 for individuals. This change, which is retroactive to January 1st, 2025, also allows you to use your HSA funds to pay for the DPC membership fees
What this means for you: If you are a W-2 employee, it’s a good idea to check your workplace benefit plans to maximize HSA contributions. Self-employed physicians have greater flexibility to establish an HSA-eligible plan.
#5: Your practice and profits
Running a medical practice means balancing patient care with profitability, and several provisions in the OBBBA could impact your business tax liabilities.
PTET elections
First, the OBBBA preserves a workaround to the SALT cap for pass-through businesses, including partnerships, LLCs, S corporations, and sole proprietors. This workaround allows owners to potentially avoid the cap by making a pass-through entity tax (PTET) election, which shifts the owners’ state tax burden from individuals to their pass-through entities. Even with the temporarily higher SALT cap, PTET elections are a valuable tax planning tool for eligible businesses in states with PTET laws.
QBI deduction
Owners of pass-through businesses also gained some long-term tax planning certainty from the OBBBA, which made the 20% qualified business income (QBI) deduction permanent. It also expanded eligibility for the credit by widening income thresholds. This could allow more businesses to qualify for the deduction.
Qualified Small Business Stock (QSBS) exclusion
The OBBBA, effective for stock issued after July 4th, 2025, has introduced a new tiered system for the QSBS capital gains exclusion. You no longer have to wait a full five years for a tax benefit. Now, you can exclude 50% of the gain after a three-year holding period, 75% after four years, and the full 100% exclusion is retained for five years or more. This change also increases the maximum gain exclusion cap from $10 million to $15 million.
Charitable deductions from corporations
Starting in 2026, C-corporations can only deduct charitable contributions to qualified charities that exceed 1% of taxable income.
Bonus depreciation
The OBBBA also brought back 100% bonus depreciation for property acquired and placed in service after January 19th, 2025.
What this means for you: These changes won’t have much impact on doctors who receive W-2 income, but they may greatly affect locum tenen, small contractors, and practice owners.
#6: Side income and reporting
Some good news for 1099 contractors and businesses that regularly engage them: the OBBA significantly raised the reporting threshold for payments reported on Forms 1099-NEC and 1099-MISC.
Previously, payers had to report payments of $600 or more. Under the new law, this threshold is $2,000, and it will be adjusted annually for inflation starting in 2027.
If you accept payments through third-party networks like PayPal and Venmo, you may receive fewer 1099-K forms in the future as well. Prior legislative efforts lowered the 1099-K reporting threshold, although the IRS kept delaying enforcement due to concerns over the administrative burden and confusion among recipients. The OBBBA officially restores the reporting threshold, so you should only receive a 1099-K if you earned over $20,000 and had more than 200 transactions on the network.
What this means for you: Higher reporting thresholds mean fewer low-dollar transactions need tracking and reporting. It could also lower the number of incorrect filings and minor mistakes that might result in IRS notices.
#7: Estate planning and gifting
One notable change to estate planning is that the OBBBA permanently increased the federal lifetime estate tax exemption to $15 million per person ($30 million for married couples) starting in 2026. That figure will be adjusted annually for inflation beginning in 2027.
Without the OBBBA, the lifetime exemption was scheduled to drop to pre-2018 levels. If allowed to expire, it would have been $5 million per person, adjusted for inflation, after 2025.
What this means for you: This certainty in the lifetime exemption offers expanded opportunities for wealth transfer planning.
Access deeper guidance
We’ve provided a high-level overview of how the OBBBA affects physicians; however, the legislation is complex and its effects are highly individualized. To help you plan proactively, we created two downloadable resources that break down the major changes affecting individual and business tax filings.
If you need more guidance, schedule a Tax Discovery Session with Cerebral Tax Advisors. We’re happy to help ensure you’re making the most of the opportunities and avoiding costly mistakes under the new rules.