The One Big Beautiful Bill and effect on estate and tax planning for physicians

Nathan McKearney: ©Wall Street Alliance Group

The recently passed One Big Beautiful Bill (OBBB) introduces several enhancements to the U.S. tax code that are designed to reduce individual tax burdens, increase deductions, and help high-income professionals grow and protect their wealth.

How does it affect physicians?

Physicians often have complex financial situations varying from private practices and multiple income streams to retirement and estate planning. The OBBB addresses many of these areas by making it easier to reduce taxable income, invest in your business, and prepare for the future. For practice owners and self-employed doctors, the bill encourages investment in equipment or business vehicles. For employed physicians and families, it offers new ways to save money and lower your annual tax bill. And for those nearing retirement or thinking about estate planning, the estate changes can have a huge long-term impact.

The key to benefiting from this bill is to be proactive and consult your CPA and financial advisor.

10 key highlights

1. Estate tax exemption increased to $15 million per person

High-net-worth physicians can now pass up to $15 million ($30 million for jointly filing spouses), indexed for inflation beginning in 2026, without incurring federal estate tax. This permanent increase is very beneficial for estate planning and it’s important to update your estate documents, trusts, or wealth transfer strategies.

2. SALT deduction cap raised to $40,000

The cap on state and local tax (SALT) deductions has been raised from $10,000 to $40,000 and includes a 1% annual increase through 2029. This is great news for high-earning physicians in states with high income or property taxes like CA, NJ, and NY. If you itemize deductions, you can now write off much more of your state tax burden. The SALT cap begins phasing out for couples with modified adjusted gross income (MAGI) over $500,000, and taxpayers over this threshold lose 30% of the deduction.

3. 20% QBI deduction made permanent

The Qualified Business Income (QBI) deduction lets practice owners and self-employed physicians deduct up to 20% of their business income. The bill made this deduction permanent and provides long-term tax savings for practices structured as S-corps, partnerships, or sole proprietors.

4. State PTET law still remains

The Pass-Through Entity Tax is a state-level tax designed to help pass-through entities (S-corps, partnerships, and LLCs), mitigate the impact of the federal $40,000 cap on SALT deductions. By paying taxes at the business level, PTET enables full deduction of state taxes on federal returns. It is not automatic and isn’t available in all states, so work with your CPA to opt-in.

5. Bonus depreciation for business equipment

Physicians who purchase medical equipment, computers, or office equipment can now deduct 100% of the cost in the year of purchase. Strategic purchases can reduce your tax bill while strengthening your practice. Self-employed physicians may benefit from the full deduction now available for large business vehicles (SUVs, trucks, etc.). Buying before the end of the year means immediate tax benefits and long-term utility.

6. “Trump Accounts” – seed money for newborns

New parents are now eligible to receive a $1,000 government-funded seed contribution into a “Trump Account,” for newborn children born between 2025-2028, and invested in a low-cost U.S. index fund until the child is 18 years old. Parents can contribute up to $5,000 annually into the Trump Accounts for their children, helping fund future education or life expenses while reducing taxable income.

7. 529 plan expansion

You can now use up to $20,000 per year from a 529 plan for K–12 expenses. It now includes books, online materials, tutoring, standardized tests, homeschooling, and special education therapy. 529s are now more versatile with enhanced options for long-term tax-advantaged savings.

8. $6,000 senior deduction for retired physicians

Retired physicians 65 and older may qualify for an extra $6,000 federal deduction. Modified adjusted gross income (MAGI) phaseouts for this deduction begin at $75,000 ($150,000 for joint filers). Managing your income carefully, implementing periodic Roth conversions, and limiting withdrawals, can help you remain eligible for this benefit.

9. Auto loan interest deduction for U.S. made cars

Physicians who finance U.S. made vehicles for work may now deduct loan interest up to $10,000 annually. Doctors with multiple practice locations or extensive travel needs may find this especially useful. However, the deduction phases out for taxpayers with modified adjusted gross income over $100,000 ($200,000 for joint filers).

10. Overtime pay deduction – up to $12,500

Health care professionals who earn extra income from overtime can now deduct up to $12,500 of overtime pay from their taxable income through 2028. By targeting income from overtime, the deduction helps reduce the tax burden that often comes with crossing into higher brackets. The deduction phases out beginning at modified adjusted gross income (MAGI) of $150,000 ($300,000 for joint filers).

Conclusion

The One Big Beautiful Bill features many tax saving opportunities for physicians to take advantage of. Some of which are subject to phaseout, and others depend on hitting certain income thresholds. So, it is important to speak with your CPA and financial advisor to start planning and saving now.

Nathan McKearney is a CFA and Financial Planner at Wall Street Alliance Group.

Securities and investment advisory services offered through Osaic Wealth, Inc. member FINRA/SIPC. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth. Osaic and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation.