Can doctors take the 20% QBI deduction?
Yes, many doctors can, but whether you get the full deduction, part of it, or none depends on your taxable income. Medicine is classified as a specified service trade or business under Section 199A. For high earners in these fields, the deduction shrinks and eventually disappears. The deduction applies to profit from a pass-through business such as a sole proprietorship, partnership, or S corporation. W-2 wages from an employer don’t count.
For 2026, a single filer with taxable income under $201,750 gets the full 20% deduction. Above $276,750 it’s gone. For married couples filing jointly, the full deduction is available under $403,500 and disappears above $553,500. These limits are based on taxable income for the whole household after deductions. They aren’t based on practice revenue or collections.
If your income falls inside the range, you get a partial deduction. A married couple with $478,500 of taxable income sits halfway through the range and would get roughly half the deduction, before other limits are applied. Inside the range, rules tied to W-2 wages the practice pays can reduce the number further, so the actual figure takes some calculation.
The One Big Beautiful Bill Act made the QBI deduction permanent and widened the phase-in range to $75,000 for single filers and $150,000 for joint filers. The rate stays at 20%. A wider range means more practice owners land in the partial zone instead of losing everything, and there’s more room to plan.
Retirement contributions are the most effective lever. Contributions to a 401(k) or a cash balance plan lower taxable income, which can move you back into the range or below it. Say a married physician couple expects $480,000 of taxable income. Maxing out a 401(k) and adding a cash balance plan contribution could bring them under $403,500 and restore the full deduction. They also save tax on the contributions themselves. Running these numbers before year end is a core part of tax planning for practice owners, because once December 31 passes most of the options are gone.
If your practice is an S corporation, the salary you pay yourself isn’t qualified business income. Only the profit left after your salary counts. A lower salary means more QBI, but the IRS requires a reasonable wage for the work you do. The right number balances payroll taxes, the QBI deduction, and how much you want to put into retirement plans.
Employed physicians aren’t automatically shut out. Side income from locums work, expert witness fees, or a medical directorship paid on a 1099 can qualify. The same income limits apply, and your W-2 salary counts toward household taxable income, so many employed doctors with side work end up in or above the range.
The deduction is only as accurate as the profit figure behind it. Clean books from healthcare bookkeeping services make it possible to project taxable income during the year and decide on contributions while there’s still time to act. Getting the full 20% back can save a practice owner tens of thousands of dollars a year.
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