Does the QBI deduction still exist, and do I qualify?
Yes, the qualified business income deduction still exists and is now permanent. The 20 percent deduction on qualified business income that was scheduled to expire has been made permanent, and starting in 2026 there’s a new $400 minimum deduction for taxpayers with small QBI amounts.
The catch for anyone running a healthcare-related business is significant. Medical services, therapy practices, and health services are classified as “specified service trades or businesses” under the tax code. This classification limits who can actually claim the deduction based on taxable income.
For 2026, the deduction begins phasing out for single filers with taxable income above roughly $201,775 and joint filers above $403,500. The deduction disappears entirely once taxable income exceeds approximately $276,775 for single filers and $553,500 for joint filers. These figures adjust for inflation each year, so verify them when you file.
This matters especially for clinicians who stack W-2 clinical income with business income. If you’re working as a nurse practitioner, physician assistant, or physician during the week while running a med spa or home care business on the side, your W-2 wages count toward that taxable income threshold. A business that would qualify for the full deduction on its own might lose part or all of that benefit when combined with your employment income.
The planning opportunities involve timing and structure. Shifting income between years, optimizing your entity structure, or using other tax strategy approaches might help you stay under the phaseout threshold in a given year. For owners in the phaseout range, the difference between qualifying and not qualifying can be meaningful. Twenty percent of your business income is real money, and a few thousand dollars in the right direction on taxable income could determine whether you keep it or lose it.
A CPA for medical businesses can walk through your specific numbers and help you understand where you land. If you’re unsure whether you qualify or want to explore what planning might help, book a consultation and we can look at your situation together.
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More Questions
The IRS sent me a letter. How bad is this?
Probably not as bad as you think. Most IRS letters are notices about a specific question or discrepancy, not audits. Even audit letters describe a defined process with steps and deadlines that can be managed.
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They classify workers correctly and run real payroll. They know margin per client and reprice or decline unprofitable ones. They price in travel and training, keep books current monthly, and set aside taxes as profit arrives.
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You need three things to line up: proven demand beyond your current capacity, projected revenue from the new hire that comfortably exceeds their fully loaded cost, and enough cash to carry them through the ramp-up months before their schedule fills.
Read answerIf I add cash-pay services alongside insurance, how do I compare them fairly?
Compare the actual collected amount per visit for insurance work after adjustments, denials, and billing overhead against your cash-pay rate. The comparison requires your own practice data, not industry averages or gut feeling.
Read answerMy business now operates in two states. What did I just get myself into?
Operating in two states means you now have filing obligations in both. You'll likely need to register with the second state, file income tax returns there, and if you have employees or taxable sales in that state, handle payroll withholding and sales tax too.
Read answerWhat deductions do medical business owners commonly miss?
Medical business owners often miss vehicle and mileage expenses, continuing education costs, professional insurance premiums, and retirement contributions. The common thread is poor documentation throughout the year.
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