New York has some of the highest state and local taxes in the country. For high-income physicians, that often means losing a significant portion of their income to taxes. Many of my clients are doctors, and over the years, I’ve learned how physicians can reduce their taxes on Long Island.
You may not be able to get rid of your tax liability entirely, but a smart strategy could help you keep more of your hard-earned wealth. Let’s take a look at a few potential ways to reduce taxes for high-income physicians.
Max Out Retirement Accounts
Maxing out retirement account contributions is one of the most important tax strategies for doctors in New York. Depending on your employment status, you may have access to different types of tax-deferred retirement accounts. Each of these accounts has a maximum annual contribution limit. These are a few examples for 2026:
- 401(k): $24,500 (additional catch-up contributions allowed after age 50)
- 403(b): $24,500 (additional catch-up contributions allowed after age 50)
- Traditional IRA: $7,500 (additional catch-up contributions allowed after age 50)
- Solo 401(k): $72,000 (additional catch-up contributions allowed after age 50)
- SEP IRA: $72,000 or 25% of income (whichever is lower)
Because these types of accounts are tax-deferred, any contributions you make now are deducted from your taxable income. You don’t pay taxes on what you contribute until you make withdrawals in retirement.
High earners may be able to save even more for retirement through backdoor Roths. Even if you make too much to contribute directly to a Roth IRA, you can make a non-tax-deductible contribution to a traditional IRA and later convert it to a Roth. Just watch out for the pro rata rule if you have other pre-tax IRAs like a SEP or a SIMPLE IRA. The IRS looks at all your IRAs as one total balance, so having those other accounts could lead to an unexpected tax bill on your conversion.
Take Advantage of the Pass-Through Entity Tax (PTET) in New York
Many medical practice owners can benefit from New York’s pass-through entity tax (PTET) laws. A pass-through entity is a business that passes profits through to its owners rather than paying corporate-level taxes. This means income is taxed only once, which can lower your overall tax bill.
Some common types of pass-through entities include:
- Limited liability companies (LLCs)
- Sole proprietorships
- S corporations
- Partnerships
A qualifying pass-through entity can also bypass the state and local tax (SALT) deduction cap. By deducting these taxes at the entity level instead of individually, you can reduce federal taxes, a significant advantage in states with high property and income taxes such as New York.
While the One Big Beautiful Bill Act raised the individual SALT cap from $10,000 to $40,400 for 2026, this benefit phases out for high earners with a modified adjusted gross income (MAGI) over $505,000 2026. In this case, PTET may be the only way to fully deduct state taxes and reduce federal liability.
If you haven’t created a pass-through entity yet, you might be considering the merits of an LLC or S-Corp. A wealth advisor can work with your other advisors to help structure your business to make the most of PTET benefits and reduce taxes effectively.
Keep in mind that this is an annual election with a strict March 15 deadline. If you miss that window or don’t properly coordinate the entity payments with your personal tax credits, you could end up facing state-level filing issues or even paying more than necessary.
Don’t Forget About Practice Deductions
Supplies and Equipment
If you have your own practice, you may be able to deduct the cost of necessary medical equipment and supplies from your taxes. Anything you deduct should be exclusively used for your business, so you don’t end up in trouble with the IRS. When in doubt, consult a tax planning professional.
Clinic Real Estate & Leases
Renting or leasing clinic space is often one of the largest expenses for physicians and can provide tax advantages. Lease payments are typically deductible as a business expense, which lowers taxable income. In many cases, related costs like utilities, maintenance, and general liability or property insurance may also be deductible, helping reduce overall tax liability.
If you own your clinic space, real estate tax deductions can be a powerful tool for reducing tax liability. One particularly effective strategy is to do a cost segregation study. This involves identifying rapidly depreciating components of a commercial property so you can deduct them sooner. Standard commercial real estate depreciation has a 39-year timeline, so a cost segregation study may let you deduct more expenses in the early years of your practice.
Malpractice Insurance
Although medical malpractice insurance is essential for any doctor, premiums seem to rise every year. Fortunately, self-employed physicians can deduct these insurance premiums from their taxable income.
Software and Technology
As the field of medicine advances, so does medical technology. If you’re like most doctors, you probably use a range of different technologies in your practice, like:
- Electronic health record systems
- Medical billing and coding platforms
- Telehealth platforms for remote visits
- Secure patient portals
- Point-of-sale software
Licenses, Certifications, and Continuing Medical Education
Another effective way to lower your tax burden is to deduct applicable costs related to licensing and certification, such as:
- State medical license renewal fees
- DEA registration
- Board certification fees
- Cost of continuing education
Office and Travel Deductions
Physicians who keep detailed records may be able to deduct a range of business expenses tied to both their practice and professional development.
Travel costs for conferences, seminars, and temporary clinic locations can be deductible when they’re directly related to your medical practice and require you to be away from your tax home.
According to Internal Revenue Service guidelines, these deductions may include transportation, lodging, and certain meal expenses, while daily commuting to a primary office is not deductible
Not all physicians maintain a home office, but those who provide telehealth services or handle administrative work from home may qualify for additional deductions. The IRS allows a home office deduction when a portion of the home is used regularly and exclusively for business purposes.
Eligible expenses can include a percentage of utilities, mortgage interest, property taxes, insurance, and depreciation. Alternatively, the IRS offers a simplified method based on a set rate per square foot. These deductions can reduce taxable income, but the space must meet strict usage requirements to qualify.
Consider Tax-Loss Harvesting
When you include tax-loss harvesting in your tax planning toolbox, you might be able to lower your taxable income. Simply put, tax-loss harvesting is when you sell poorly performing investments at a loss to offset what you’ve earned throughout the year. The benefit is that it can lower capital gains taxes by offsetting gains with losses. If your losses exceed your gains, you can use a portion of those losses to offset up to $3,000 of your ordinary income annually. Any unused losses can potentially be carried forward to future years. Be aware that the IRS wash-sale rule restricts repurchasing substantially identical securities 30 days before or after the date you sold the loss-generating investment.
Deduct Student Loan Interest
You can generally deduct up to $2,500 of student loan interest per year as an above‑the‑line adjustment to income, but only if you meet certain income and filing requirements. The $2,500 limit is a statutory cap that doesn’t change annually, though the income phase‑out ranges are adjusted over time.
This deduction is typically most helpful for physicians who have recently graduated from medical school. It starts to phase out at a modified adjusted gross income (MAGI) of $85,000. If your MAGI is $100,000 or more, you can’t claim the deduction.
Want to Learn More About How Physicians Can Reduce Taxes on Long Island?
If you’re investigating how physicians can reduce taxes, it’s important to understand that reducing tax liability often requires several different tactics. But when you’re already busy working and running a practice, it can be hard to find the time to build a robust tax strategy.
That’s why Investment Insight Wealth Management is here. Several of our clients are doctors, and we take pride in helping each one create a personalized tax strategy. If you have questions about what we do and how we can assist, contact us today. To schedule a meeting, call (516) 249-0060 or email hello@myinvestmentinsight.com.
Frequently Asked Questions About How Physicians Can Reduce Taxes on Long Island
What are some common tax deductions available for doctors who own their own practice on Long Island?
Doctors who operate practices on Long Island may be able to deduct a wide range of business expenses, including:
- Medical supplies and equipment
- Clinic lease or rent payments
- Malpractice insurance premiums
- Software and telehealth technologies
- Licensing, board certification, and continuing education costs
Keeping detailed records is essential to maximize these deductions and stay IRS-compliant.
How does New York’s pass-through entity tax help physicians reduce their tax bill?
New York’s pass-through entity tax (PTET) allows physicians who operate through an LLC, S-Corp, or partnership to pay state taxes at the entity level, effectively bypassing the federal SALT deduction cap. For 2026, that cap is $40,400. Bypassing the SALT deduction cap can produce significant savings for high-income doctors on Long Island.
Which retirement accounts should physicians max out to lower their taxable income?
For physicians, it may be smart to prioritize contributing to max-out tax-deferred retirement accounts each year. Tax-deferred options may include:
- Solo 401(k) or SEP IRA: Up to $72,000 annually
- Employer 401(k) or 403(b): Up to $24,500 annually
- Traditional IRA: Up to $7,500 annually
Contributions reduce taxable income now, with taxes deferred until retirement withdrawals begin.
Can a physician deduct their home office expenses?
Yes, physicians who regularly use a dedicated home space for telehealth or administrative work may qualify for a home office deduction. They can either deduct a portion of their actual expenses (e.g., utilities, mortgage interest, and property taxes) or use the IRS simplified rate per square foot. For a home office space to qualify, it must be used exclusively for business.
Who can help Long Island physicians build a comprehensive tax reduction strategy?
Investment Insight Wealth Management has extensive experience working with physicians on Long Island. Reducing taxes effectively requires combining multiple strategies, such as making smart retirement contributions, structuring entities, claiming real estate deductions, and more, so working with an experienced advisor can help you make the right decisions for your specific circumstances.