How the 2025 IRS Changes Will Impact High-Income Doctors
- Aug 5
- 2 min read
Many high-income doctors see taxes as an unavoidable part of a successful practice. Yet each year, IRS adjustments quietly impact your effective tax rate and your ability to preserve wealth.
At ISTAXPro, we ensure accurate bookkeeping and tax return preparation for doctors, capturing these annual changes correctly in your filings while you remain focused on patient care. Here are key 2025 updates to know before you file.
1. Tax Bracket Adjustments
The IRS has adjusted tax bracket thresholds for inflation, while the top marginal rate remains at 37%. Even small shifts in thresholds can result in:
● More income being taxed at higher rates if collections or bonuses increase.
● Missed opportunities to manage income and deductions before year-end.
What to track: Review your income and deductible expenses before December 31 to help manage your taxable income for the year.
2. QBI Deduction Phase-Outs
Under IRC Section 199A, eligible doctors operating as S-Corps or partnerships may qualify for a 20% Qualified Business Income (QBI) deduction. For 2025, phase-outs begin at $400,000 (single) and $450,000 (joint).
Crossing these thresholds can reduce or eliminate the deduction, increasing your tax liability.
What to track: Ensure your books accurately reflect your income, wages, and distributions to support correct QBI reporting on your tax return.
3. Higher Retirement Contribution Limits
For 2025, 401(k) contribution limits have increased to $24,500, with a $7,000 catch-up for those over 50. These higher limits provide more opportunity to reduce taxable income while funding your retirement.
What to track:Ensure your contributions are recorded accurately in your bookkeeping to reflect on your tax return.
4. Equipment Purchases and Depreciation
New equipment, technology upgrades, and facility improvements may qualify for Section 179 and bonus depreciation:
● Section 179 allows you to expense up to $1.22 million of qualifying equipment in 2025.
● Bonus depreciation at 100% for new and used qualified property remains available.
Equipment must be purchased and placed in service by December 31 to qualify for 2025 deductions.
What to track: Maintain clear records of purchase dates, amounts, and placed-in-service status for your tax filings.
5. State Tax Considerations
Doctors practicing in high-tax states like California should remain aware of:
● State-specific differences in Section 179 and bonus depreciation treatment.
● Possible changes in state tax laws affecting your deductions.
Accurate, organized books ensure your federal and state filings align correctly, reducing the risk of discrepancies.
Why This Matters
High-income doctors often pay six figures in taxes annually. Small annual changes can add up, leading to overpayment if your financial records are not clear and accurate.
Staying organized and capturing eligible deductions correctly helps you:
● Preserve liquidity for your practice.
● Reduce unnecessary tax payments.
● Maintain compliance with confidence.
Stay Prepared with Accurate Filing
At ISTAXPro, we help doctors and dentists:
● Maintain clear, accurate books.
● Prepare and file tax returns that reflect annual IRS changes.
● Capture available deductions while ensuring compliance.
File Accurately This Year
If you want to ensure your 2025 tax filings are accurate and that you are not leaving money on the table, ISTAXPro is ready to help.
Contact ISTAXPro today to prepare
your books and file your tax return accurately, so you can focus on
your patients while keeping
more of what you earn.
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