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Absolutely. Catch-up and clean-up is one of the most common ways clients start with us. We will get you current and keep you there.

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You get a real CPA firm and a dedicated team that knows your business, not just software. We use modern technology, but a senior CPA reviews and advises on everything.

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Can physicians take the QBI deduction?

Only below the income thresholds. Health services are a specified service trade or business, so above the upper thresholds the Section 199A deduction is phased out entirely. For 2026 the phase-out runs roughly from $400,000 to $550,000 for married filing jointly, and from $200,000 to $275,000 for single filers. Many attending physicians sit above the top of that range, which means the deduction anchoring most physician tax advice is unavailable to them.

What actually reduces a high-earning physician tax bill then?

Retirement plan capacity does the heavy lifting, not QBI. For 2026 the 401(k) elective deferral limit is $24,500, the overall defined contribution limit is $72,000, and a defined benefit or cash balance plan stacked on top can support far larger deductible contributions for older physicians, subject to actuarial testing. Entity structure and deduction discipline matter, but they are second order.

Does an S-corp help a physician?

It can, on 1099 income, by separating a reasonable salary from distributions that are not subject to self-employment tax. It does nothing for W-2 employment income. The benefit has to clear the payroll and compliance cost, and the salary figure has to be documented rather than set by a rule of thumb.

Is the tax planning different for W-2 versus 1099 physicians?

Completely. A W-2 physician is working inside someone else plan and the levers are the plan itself, backdoor Roth, timing and deduction discipline. A 1099 physician controls the entity, the plan design and the deduction set, which is where the larger opportunities are and also where the mistakes are.

What is the super catch-up and does it apply to me?

For 2026 the standard age 50 and over 401(k) catch-up is $8,000, and for ages 60 to 63 it rises to $11,250. SECURE 2.0 also requires certain higher-wage catch-up contributions to be made as Roth inside the plan. It is a small number relative to a physician income, but it is free capacity and it is routinely missed.

When should a physician start tax planning?

Before the first attending year, not after it. The largest single planning error we see is a new attending who spends a full year at attending income with a resident tax structure, then asks in March what can be done. By then most of the levers for that year have closed.

Tax Strategy

Tax Strategies For High-Income Physicians

Most of the advice written for physicians is borrowed from business-owner playbooks. One rule makes a lot of it inapplicable, and almost nobody leads with it.

A CPA reviewing tax planning for a high-income physician

By Nneka Nwobi, CPA, MBA, Founder & CEO

Last updated 23 July 2026

The Answer, First

If your taxable income is above the Section 199A thresholds and you practice medicine, the QBI deduction that anchors most physician tax strategy lists is largely or entirely unavailable to you. Health services are a specified service trade or business, and above the top of the phase-out range the deduction is gone.

That single rule invalidates a surprising amount of what gets published for physicians, because most of it is adapted from advice written for general business owners who do not face the SSTB exclusion. The usual list is not just incomplete for a high-earning physician. It is in the wrong order.

The SSTB Rule, With The 2026 Numbers

Section 199A lets many pass-through owners deduct up to 20 percent of qualified business income. Specified service trades or businesses, which include health services, lose the deduction once taxable income passes the upper threshold.

For 2026, after the One Big Beautiful Bill Act, the ranges run roughly as follows. Married filing jointly: full benefit below about $400,000, phasing out from about $400,000 to $550,000, and eliminated above about $550,000. Single or head of household: full benefit below about $200,000, phasing out from about $200,000 to $275,000, and eliminated above about $275,000. OBBBA widened the phase-in ranges and made the deduction permanent going forward.

The practical read: a single attending over roughly $275,000, or a dual-physician couple over roughly $550,000, should stop planning around QBI. A household sitting inside the phase-out range is the interesting case, because there the deduction is partially available and income timing genuinely changes the answer.

Physicians are handed a list that opens with the QBI deduction and closes with retirement plans. For most attendings that list should be read backwards. The plan design is where the money is, and it is the part that gets three sentences at the end.

Nneka Nwobi, CPA, MBA, Founder and CEO, RCN CPAs & Business Advisors

What Actually Moves The Number: Plan Capacity

Retirement plan capacity is the largest deductible lever available to a high-earning physician, and unlike QBI it does not disappear because of what you do for a living. The 2026 figures:

401(k) elective deferral: $24,500
Catch-up, age 50 and over: $8,000
Super catch-up, ages 60 to 63: $11,250
Overall defined contribution limit: $72,000
Compensation limit for plan purposes: $360,000
Defined benefit maximum annual benefit: about $290,000
IRA contribution limit: $7,500

The step most physicians never take is stacking. A 401(k) with profit sharing, plus a cash balance or defined benefit plan on top, can support very large deductible contributions for a physician in their forties or fifties, because defined benefit limits are driven by actuarial funding rather than a flat cap. Actuarial testing and nondiscrimination compliance apply, and the plan has to be designed properly rather than bought off a shelf.

W-2 And 1099 Are Two Different Playbooks

This is the second thing generic advice gets wrong. It writes as if all physician income is the same. It is not, and the levers barely overlap.

Employed, W-2

You are inside someone else’s structure

Max the employer plan, including the catch-up tier you actually qualify for
Backdoor Roth, watching the pro-rata rule across all IRAs
Mega-backdoor Roth where the plan permits after-tax contributions and conversion
Deduction timing and charitable bunching in high-income years
Own-occupation disability cover, which is a risk decision rather than a tax one

Independent, 1099

You control the structure

Entity and S-corp analysis on the 1099 income, with a documented salary
Solo 401(k) rather than a SEP where employee deferrals and Roth matter
Cash balance or defined benefit plan stacked on the 401(k) for older physicians
The genuine business deduction set: malpractice premiums, CME, licensing and credentialing, professional dues, equipment, and the self-employed health insurance deduction
Quarterly estimates built properly, so the year does not end in a penalty

If you have both, and many physicians do through locum or moonlighting work, the 1099 side deserves its own structure rather than being treated as a rounding error on the return.

On The S-Corp Question

An S election on 1099 income can separate a reasonable salary from distributions that are not subject to self-employment tax. It does nothing at all for W-2 employment income. The benefit has to clear the payroll and compliance cost, and state treatment can erode some of it.

The part that causes trouble later is the salary figure itself. There is no percentage safe harbor, whatever you have been told. We wrote about reasonable compensation separately, including why setting the salary too low can cap your own Section 199A deduction if you are in a position to claim one.

Professional entity rules vary by state, and whether you can use a PLLC, a PC or a PA affects both formation and the timing of an S election. Entity formation and governing documents require a licensed attorney.

If You Own Property, Read The Passive Rules First

Real estate is the most common next step for a physician with surplus income, and it is where the most money gets spent on advice that cannot be used. Rental losses are generally passive, and a full-time physician will struggle with the real estate professional hours tests because more than half of your total personal services have to be in real property trades or businesses.

The cost segregation piece covers the three routes through those rules, including the short-term rental option that does not require professional status and the spouse route that often does the work in a physician household.

Frequently Asked Questions

Can physicians take the QBI deduction?: Only below the income thresholds. Health services are a specified service trade or business, so above the upper thresholds the Section 199A deduction is phased out entirely. For 2026 the phase-out runs roughly from $400,000 to $550,000 for married filing jointly, and from $200,000 to $275,000 for single filers. Many attending physicians sit above the top of that range, which means the deduction anchoring most physician tax advice is unavailable to them.
What actually reduces a high-earning physician tax bill then?: Retirement plan capacity does the heavy lifting, not QBI. For 2026 the 401(k) elective deferral limit is $24,500, the overall defined contribution limit is $72,000, and a defined benefit or cash balance plan stacked on top can support far larger deductible contributions for older physicians, subject to actuarial testing. Entity structure and deduction discipline matter, but they are second order.
Does an S-corp help a physician?: It can, on 1099 income, by separating a reasonable salary from distributions that are not subject to self-employment tax. It does nothing for W-2 employment income. The benefit has to clear the payroll and compliance cost, and the salary figure has to be documented rather than set by a rule of thumb.
Is the tax planning different for W-2 versus 1099 physicians?: Completely. A W-2 physician is working inside someone else plan and the levers are the plan itself, backdoor Roth, timing and deduction discipline. A 1099 physician controls the entity, the plan design and the deduction set, which is where the larger opportunities are and also where the mistakes are.
What is the super catch-up and does it apply to me?: For 2026 the standard age 50 and over 401(k) catch-up is $8,000, and for ages 60 to 63 it rises to $11,250. SECURE 2.0 also requires certain higher-wage catch-up contributions to be made as Roth inside the plan. It is a small number relative to a physician income, but it is free capacity and it is routinely missed.
When should a physician start tax planning?: Before the first attending year, not after it. The largest single planning error we see is a new attending who spends a full year at attending income with a resident tax structure, then asks in March what can be done. By then most of the levers for that year have closed.

Start With The Return You Already Filed

A Smart Tax Review reads your last return and your current structure and tells you which levers are actually open to you at your income, and which ones you have been told about that are not. $97, credited toward any work that follows.

Book a Smart Tax Review

Or read the Smart Wealth Method, which is how we run planning for physicians end to end.

This page is general information about federal tax rules, not tax advice for any specific taxpayer, and no client relationship is created by reading it. Tax outcomes depend on facts we have not reviewed, and figures, thresholds and limits change. RCN is a CPA firm and not a registered investment adviser; nothing here is investment advice or a recommendation of any security. Entity formation, trusts and governing documents require a licensed attorney. RCN CPAs & Business Advisors, Kennesaw, Georgia.