For doctors and mental health professionals running their own practice, how you're taxed can make a meaningful difference in what you take home each year.
Many solo and group practice owners operate as sole proprietors or single-member LLCs by default, paying self-employment tax on their full net profit. Electing S-corp status can reduce that tax burden by splitting your income into a reasonable salary and a distribution, but the right structure depends on your practice's profit, your state, your filing status, and your specific financial picture, including how it affects your Qualified Business Income deduction and retirement contribution limits.
Use the calculator below to see a quick estimate of how an S-corp election could change your practice, then talk to a CPA who works specifically with healthcare and mental health professionals to see what applies to your situation.
How much could switching to an
S-corp save your practice?
Enter your numbers below to see an estimate that accounts for payroll taxes, your QBI deduction, and retirement contribution limits. This is a starting point, not a filing figure.
Used to suggest a starting reasonable salary ratio.
Auto-suggested from your profit and practice type. Editable, confirm with a CPA.
Affects QBI phase-out and Additional Medicare Tax thresholds.
From a separate job. Reduces remaining Social Security wage base.
Calculating…
Calculated automatically from your profit, other wages, and filing status. Used only to estimate the dollar impact of your QBI deduction change.
Used to suggest state filing/franchise costs below.
Payroll processing, added tax prep, and state filing fees, per year. Editable.
The QBI deduction lets you deduct up to 20% of business profit from your taxable income. Healthcare and mental health practices are subject to extra phase-out rules at higher income, which is why this can shift when you switch to an S-corp.
Illustrative estimate only. Figures current as of January 2026 (SSA/IRS, including OBBBA-updated QBI ranges and 2026 retirement plan limits per IRS Rev. Proc. 2025-32 and Notice 2025-67). Reasonable salary is auto-suggested and must be reviewed with a CPA. QBI tax impact uses your selected marginal bracket as an approximation, not your actual return calculation. Does not account for state income tax on the underlying profit itself, itemized deductions, or your complete financial picture.
Retirement contribution limits
S-corp election can lower how much you're able to contribute to a Solo 401(k) or SEP IRA, since employer contributions are based on W-2 salary, not total practice profit. This is one of the trade-offs a payroll-tax-only comparison misses.
| Plan | As sole proprietor | As S-corp |
|---|---|---|
| Solo 401(k), max contribution | $0 | $0 |
| SEP IRA, max contribution | $0 | $0 |